Cotton Dropped On Profit Booking After Seen Supported As Area Under Cotton Drops

Published 09-08-2024, 03:00 pm
© Reuters.  Cotton Dropped On Profit Booking After Seen Supported As Area Under Cotton Drops
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Cotton candy prices settled slightly lower by -0.11% at ₹56,440 due to profit booking, following a recent supportive trend driven by supply concerns. The decline in cotton acreage across key states such as Punjab, Haryana, and Rajasthan has raised concerns about future supply. Punjab reported a significant drop to just 97,000 hectares under cotton, a sharp decrease from historical levels of up to 7.58 lakh hectares during the 1980s and 1990s. Similarly, Rajasthan and Haryana have also seen reductions in cotton planting areas, with Rajasthan's acreage halving from 8.35 lakh hectares last year to 4.75 lakh hectares, and Haryana's falling from 5.75 lakh hectares to 4.50 lakh hectares in 2024. The market also found support due to delays in shipments from major exporters like the US and Brazil, triggering increased demand for Indian cotton from mills in neighbouring countries.

Additionally, firm cottonseed prices are keeping cotton prices buoyant despite the ongoing sowing season in southern Indian states like Karnataka, Telangana, and Andhra Pradesh. On the global front, the 2024/25 U.S. cotton projections indicate higher beginning and ending stocks, with the season average upland farm price forecasted lower by 4 cents to 70 cents per pound. Globally, beginning stocks, production, and consumption have been revised upwards, leading to an increase in projected world-ending stocks by 480,000 bales to 83.5 million.

Technically, the market is under fresh selling pressure, with a 0.6% gain in open interest settling at 169 contracts. Prices dropped by ₹60, with support now seen at ₹56,340, and a potential test of ₹56,250 if this level is breached. On the upside, resistance is expected at ₹56,510, with the possibility of prices testing ₹56,590 if the market gains momentum.

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