Cotton Gains Amid Expectations of Lower Supply and Increased Demand from Textile

Cotton yesterday settled up by 1.14% at 27440 amid expectations of lower supply and increased demand from the textile industry as countries continue re-opening efforts. World cotton stocks are projected at 89.3 million bales at the end of 2021/22, the lowest in three years. Meanwhile, global production is forecast 5% higher at 118.9 million bales but still set to remain below 2019 record levels. Output is expected to decline in China as the industry becomes less competitive with rising labor costs. On the other hand, high cotton yields are projected in the US, Brazil, Australia, and Pakistan due to favorable weather conditions and the increasing harvested area.  
 
The USDA's weekly export sales report showed net sales of 251,900 running bales (RB) for the 2021/2022 marketing year, primarily for Turkey, Pakistan, Vietnam, Mexico, and China. The report also showed exports of 246,100 RB for the new marketing year, up 32% from the previous week and 2% from the prior 4-week average. Pink bollworm attack on cotton crop has been reported in some areas in Bathinda district. Farmers are claiming damage on the cotton sown earlier. The pink bollworm attack has been reported in Talwandi Sabo, Sangat, and Rama blocks along with few villages adjoining Bathinda city. In the spot market, Cotton gained by 210 Rupees to end at 27090 Rupees.  
 
Technically market is under fresh buying as the market has witnessed a gain in open interest by 3.09% to settled at 5744 while prices are up 310 rupees, now Cotton is getting support at 27240 and below same could see a test of 27050 levels, and resistance is now likely to be seen at 27550, a move above could see prices testing 27670.  

Trading Ideas:
# Cotton trading range for the day is 27050-27670.
# Cotton prices gained amid expectations of lower supply and increased demand from the textile industry as countries continue re-opening efforts.
# World cotton stocks are projected at 89.3 million bales at the end of 2021/22, the lowest in three years.
# Meanwhile, global production is forecast 5% higher at 118.9 million bales, but still set to remain below 2019 record levels
# In the spot market, Cotton gained by 210 Rupees to end at 27090 Rupees.