Cotton candy prices surged by 0.93% to settle at 56,500, driven by robust demand for Indian cotton from key buyers like Bangladesh and Vietnam. However, the upside was limited due to sluggish milling demand amid muted global yarn demand. Prospects of a better crop in countries like Australia also tempered the upward momentum. The International Cotton Advisory Committee (ICAC) projected increases in cotton-producing areas, production, consumption, and trade for the upcoming season, 2024-25. Meanwhile, in India, cotton stocks are anticipated to plummet by nearly 31% in 2023/24, reaching their lowest level in over three decades due to lower production and rising consumption. This could restrain exports from the world's second-biggest producer, supporting global prices but potentially pressuring the margins of local textile companies.
For the marketing year 2024/25, India's cotton production is estimated at 25.4 million 480 lb. bales, with mill consumption expected to rise to 24.5 million bales as yarn and textile demand improves internationally. Import duties on extra-long staple (ELS) cotton have been rescinded, leading to an estimated 20% increase in imports. In contrast, China's cotton imports for MY 2024/25 are forecasted at 2.4 million metric tons, driven by higher domestic and international demand for textile and apparel products. China's cotton production for the same period is expected to be stable in Xinjiang but declining in other regions.
Technically, the cotton candy market saw short covering, with a significant drop in open interest by 21.89% and prices rising by 520 rupees. Support for Cotton candy is identified at 56,040, with a potential test of 55,570 if this level is breached. On the upside, resistance is anticipated at 56,840, with a move above potentially leading to testing 57,170.