Cotton dropped on profit booking after prices gained as USDA cut production in 2024

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Cotton dropped on profit booking after prices gained as USDA cut production in 2024
Credit: © Reuters.

Cottoncandy prices dipped by 0.85% to settle at 58380 due to profit booking, following a recent boost in prices. The USDA's October WASDE report attributed this price surge to a decrease in U.S. cotton production for 2023/24, mainly due to lower yields in Texas. Additionally, Brazil is expected to outpace the U.S. in cotton production, with their exports nearing historic levels.

Australia also saw a spike in cotton exports to China, thanks to improved trade relations. The Cotton Association of India (CAI) revised their crop production estimate for the 2022-23 season to 31.8 million bales, slightly up from their earlier projection. This contrasts with the government's estimate of 34.3 million bales for the season. The Indian Cotton Federation anticipates a cotton production of 330-340 lakh bales in the 2023-24 season, with sowing already exceeding 12.7 million hectares. However, some regions in Telangana witnessed a decline in cotton area due to unfavorable seasonal conditions.

On the technical front, the cotton market is experiencing fresh selling pressure. Open interest increased by 2.7%, settling at 114, while prices fell by 500 rupees. Support for Cottoncandy is at 58280, potentially testing 58170, while resistance is expected at 58500, with the possibility of prices reaching 58610.

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