Cotton Gains as the Yield Dropped Despite a Rise in the Area Under the Fibre Crop

Cotton yesterday settled up by 0.48% at 27040 as the yield per hectare of Indian cotton has dropped below 500 kg per hectare despite a rise in the area under the fiber crop. Data from the Committee on Cotton Production and Consumption (CCPC), a body comprising representatives from growers, traders, mills, exporters, and government, show that while the area under cotton has topped 130 lakh hectares (lh) since 2019, the yield per hectare dropped below 500 kg, four times out of the last six years. According to the CCPC, cotton closing stocks, last season were 120.95 lakh bales, and for the current season, they have been estimated at 97.95. 
 
Industry and trader experts feel the closing stocks this season could be lower than CCPC’s estimates. CCPC data show that Maharashtra has the highest area under cotton at 41.84 lh, but its yield is the lowest among all States below 350 kg. Only Gujarat has shown a rise in acreage over the last three years, but this is attributed to the cultivation of an unauthorized Bt (Bacillus thuringiensis) variety. Prices seen supported amid expectations of lower supply and increased demand from the textile industry as countries continue re-opening efforts. In the spot market, Cotton gained by 80 Rupees to end at 27320 Rupees.  
 
Technically market is under short covering as the market has witnessed a drop in open interest by -0.77% to settled at 5444 while prices are up 130 rupees, now Cotton is getting support at 26930 and below same could see a test of 26830 levels, and resistance is now likely to be seen at 27140, a move above could see prices testing 27250.  

Trading Ideas:
# Cotton trading range for the day is 26830-27250.
# Cotton prices gained as support seen cotton yield drops below 500 kg per hectare in India despite a rise in the area
# Prices seen supported amid expectations of lower supply and increased demand from the textile industry
# World cotton stocks are projected at 89.3 million bales at the end of 2021/22, the lowest in three years.
# In spot market, Cotton gained  by 80 Rupees to end at 27320 Rupees.v