Cotton dropped on profit booking after prices rose as USDA cut U.S. production

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Cotton dropped on profit booking after prices rose as USDA cut U.S. production
Credit: © Reuters.

Cottoncandy experienced a decline of -0.54% to settle at 58,700 due to profit booking, following a rise triggered by the USDA's October WASDE report. The report cut U.S. cotton production for 2023/24 to 12.8 million bales, citing lower yields in Texas. Interestingly, Brazil's cotton production is expected to surpass that of the United States for the first time, and Brazil is close to outdoing U.S. cotton exports for the first time since the 19th century. 

Australia saw a surge in cotton exports to China in August, reaching 61,319 metric tons worth $130 million, taking advantage of improved trade relations. In India, the Cotton Association increased its estimate for the 2022-23 season to 31.8 million bales, up from its earlier estimate of 31.1 million bales but lower than government estimates. The 2023-24 cotton season in India is anticipated to yield between 33 to 34 million bales. The cotton area in Telangana decreased due to unfavourable seasonal conditions. Cotton picking is set to gain momentum in the state around the second or third week of November, with expectations of normal rainfall. In Rajkot, a significant spot market, cotton prices ended at 27,685.8 Rupees, down by -0.23%. 

From a technical standpoint, the market experienced long liquidation, with open interest remaining unchanged at 108 and prices dropping by -320 rupees. Support for Cottoncandy is at 58,600, with the possibility of testing at 58,490, while resistance is likely at 58,820, with potential testing at 58,930.

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