Cottoncandy prices settled 0.47% higher at ₹53,610, supported by a downward revision in Brazil’s 2024-25 cotton production forecast to 3.79 million tonnes from 3.83 million tonnes due to reduced acreage in Mato Grosso. However, the Cotton Association of India (CAI) has revised India's cotton crop projections upward by 2 lakh bales to 304.25 lakh bales, citing better-than-expected output in Telangana, where production is now seen at 42 lakh bales, up by 6 lakh bales. Despite the increase in India’s output, kapas arrivals in Punjab, Haryana, and Rajasthan have declined by 43% year-on-year, leading to supply constraints and raw material shortages for ginners and spinners.
The latest WASDE report projected higher global production and ending stocks for 2024-25, pressuring prices. Global cotton output is expected to rise by 1.2 million bales to 117.4 million bales, driven by higher production in India and Argentina. However, strong export orders and rising demand from garment industries in South India are providing downside support. As per CAI, cumulative cotton arrivals stood at over 156 lakh bales by January 22, surpassing half of the estimated crop size. December-end stocks were estimated at 85.04 lakh bales, with consumption projections raised by 2 lakh bales to 315 lakh bales for 2024-25.
Technically, the market is witnessing short covering as open interest remained unchanged at 253, while prices increased by ₹250. Cottoncandy has support at ₹52,030, with a potential test of ₹50,440 on the downside. Resistance is seen at ₹54,490, and a breakout could push prices toward ₹55,360.