Cotton Gains Tracking Rise in Overseas Amid Concerns Over Crop Quality

US Cotton #2 Futures yesterday settled up by 0.08% at 24740 tracking rise overseas amid concerns over crop quality after heavy rains lashed major growing regions. The daily arrivals have stopped, as farmers and stockists have less stock. Meanwhile, mill owners and exporters are hoping to restore their supplies for the next two to three months, while the new crop is more than three months away. CAI has reduced the crop size by 4 lakh bales (each of 170 kg) to 356 lakh bales. CAI has increased the consumption estimate for the current crop year by 10 lakh bales to 325 lakh bales from its previous estimate of 315 lakh bales. Cotton exports for 2020-21 are projected to increase by 7 lakh bales to 72 lakh bales based on the input received from exporter-members, CAI.
  
China’s 2020/21 imports are forecast at a 7-year high, driven by the highest projected consumption in 3 years, robust State Reserve (SR) imports, and attractive prices for imported cotton. For 2021/22, the June forecast shows higher trade and consumption with lower production and stocks. A lower consumption outlook for India is more than offset by higher expected demand in China, Bangladesh, and Turkey which is driving higher imports for these countries. In the spot market, Cotton dropped by -30 Rupees to end at 24650 Rupees.
  
Technically market is under fresh buying as the market has witnessed a gain in open interest by 0.73% to settled at 6870 while prices up 20 rupees, now Cotton is getting support at 24640 and below same could see a test of 24530 levels, and resistance is now likely to be seen at 24820, a move above could see prices testing 24890.

Trading Ideas:
# Cotton trading range for the day is 24530-24890.
# Cotton prices seen supported tracking rise in overseas amid concerns over crop quality after heavy rains lashed major growing regions.
# The daily arrivals have stopped, as farmers and stockists have less stock.
# Meanwhile, mill owners and exporters are hoping to restore their supplies for the next two three months
# In spot market, Cotton dropped  by -30 Rupees to end at 24650 Rupees.