Cotton Gained due to Concerns Over Production, Slow Arrivals and Exports Demand

Cotton yesterday settled up by 1.62% at 44670 due to concerns over production, slow arrivals, and better domestic and exports demand. Domestic cotton arrivals are down 25% or 88.95 lakh bales so far this season to around 238 lakh bales compared to last year. The Telangana government is targeting to increase the area under cotton by 55–65 per cent to about 28–30 lakh hectares (lh) from last year’s 18 lakh hectares even as the cottonseed industry pegged the growth in cotton acreage at 15 per cent in the upcoming Kharif season, starting July. As per USDA report, the all-cotton planted area for the coming season (2022) is estimated at 12.2 million acres, up 9 percent from last year.  
 
In its latest Apr report, the USDA increased the global cotton production forecast in 2021-22 to 120.2 million bales (1 US bale= 218kg), compared to 119.9 million bales in Feb 2022. India’s crop is unchanged at 26.50 million bales. India allowed duty-free imports of cotton until Sept. 30 as prices in the local market jumped to a record high because of a drop in the production, the government said in a notification. The world's biggest producer of fibre also removed the Agriculture Infrastructure and Development Cess (AIDC) on the imports, the government said. In spot market, Cotton dropped by -210 Rupees to end at 44970 Rupees. 
 
Technically market is under short covering as the market has witnessed a drop in open interest by -12.47% to settle at 3088 while prices up 710 rupees, now Cotton is getting support at 44170 and below same could see a test of 43660 levels, and resistance is now likely to be seen at 44950, a move above could see prices testing 45220.  

Trading Ideas:
# Cotton trading range for the day is 43660-45220.
# Cotton gained due to concerns over production, slow arrivals, and better domestic and exports demand.
# India allowed duty-free imports of cotton until Sept. 30 as prices in the local market jumped to a record high because of a drop in production.
# India's cotton output is likely to fall to 33.51 million bales in the current year from last year's 35.3 million bales, estimates CAI.
# In spot market, Cotton dropped by -210 Rupees to end at 44970 Rupees.