Cotton candy futures settled down by 0.09% at ₹55,820, as weak demand from the yarn markets and payment constraints pressured prices. India's cotton production for the 2024/25 season is forecast to fall by 7.4% to 30.2 million bales due to a reduction in planted area and crop damage from excessive rainfall. The USDA also lowered India's cotton production estimate to 30.72 million bales, with ending stocks reduced to 12.38 million bales due to adverse weather and pest issues. The production drop in India, the world's second-largest cotton producer, is expected to reduce exports and force the country to increase imports, which will likely support global prices.
India's cotton imports are projected to rise to 2.5 million bales in 2024, up from 1.75 million bales in 2023. Meanwhile, cotton exports are expected to decrease from 2.85 million bales to 1.8 million bales. In the U.S., cotton production for 2024/25 has been lowered by over 300,000 bales due to Hurricane Helene's damage, leading to reduced exports and mill use. However, global production is set to increase by over 200,000 bales, driven by higher output from China, Brazil, and Argentina, which offsets the reductions in the U.S. and Spain. In Rajkot, a key spot market, prices rose by 0.18%, ending at ₹25,910.45 per quintal, showing some resilience despite global supply concerns.
Fresh selling has been observed as open interest rose by 17.58%, settling at 194 contracts, while prices fell by ₹50. Cottoncandy is currently supported at ₹55,690, with a break below this level potentially testing ₹55,560. On the upside, resistance is seen at ₹55,960, and a move above could test ₹56,100.
Trading Ideas:
# Cottoncandy trading range for the day is 55560-56100.
# Cotton dropped as yarn markets face weak demand and payment constraints.
# India's cotton production in 2024/25 is likely to fall by 7.4% from a year ago to 30.2 million bales.
# Cotton production is projected to increase in China, Brazil, and Argentina, more than offsetting reductions in the US and Spain – USDA
# In Rajkot, a major spot market, the price ended at 25910.45 Rupees gained by 0.18 percent.