Cotton Gains Tracking Overseas Prices Amid Concerns Over the Weather in Top Region

US Cotton #2 Futures yesterday settled up by 0.34% at 23890 as some support seen tracking overseas prices amid concerns over the weather in top growing regions. Meanwhile, heavy rains over the weekend from Tropical Storm Claudette threatened the natural fibre crop in the U.S. Delta region. There are concerns that remain about the size of the U.S. crop in 2021, with how many acres have been planted and on the flip side demand is still good overseas. Falling arrival numbers of raw cotton due to the lean supply season and thin stocks lying with ginners and farmers has resulted in a supply crunch in the market.
 
For the first time in six years, Punjab’s area under cotton cultivation this Kharif season has crossed the 3 lakh hectare mark. This is an increase of 17% over 2020 when cotton was sown on 2.5 lakh hectare. The state, however, is still 41% short of the golden phase in 2011-12 when the area under the traditional cash crop was 5.2 lakh hectare. In 2015, cotton was sown on 3.25 lakh hectares in southern districts. After a devastating period of the worst whitefly attack on cotton that year, farmers turned away from sowing the crop. Before 2014, over 4 lakh hectare was under cotton. In the spot market, Cotton gained by 130 Rupees to end at 24240 Rupees.
  
Technically market is under short covering as the market has witnessed a drop in open interest by -38% to settled at 1907 while prices up 80 rupees, now Cotton is getting support at 23800 and below same could see a test of 23710 levels, and resistance is now likely to be seen at 23950, a move above could see prices testing 24010.
 
Trading Ideas: 
# Cotton trading range for the day is 23710-24010.
# Cotton prices traded in range as some support seen tracking overseas prices amid concerns over the weather in top growing regions.
# Meanwhile, heavy rains over the weekend from Tropical Storm Claudette threatened the natural fibre crop in the U.S. Delta region.
# In Punjab, for the first time in six years, the area under cotton crosses 3 lakh hectare
# In the spot market, Cotton gained by 130 Rupees to end at 24240 Rupees.