Cotton gained buoyed by lingering concerns over supply.

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  • Commodities News
Cotton gained buoyed by lingering concerns over supply.
Credit: © Reuters.

Cotton candy saw a rise of 0.53%, settling at 61160, driven by ongoing concerns about supply. The 2023/24 U.S. cotton projections indicate higher beginning stocks but lower production, exports, and ending stocks. Beginning stocks for 2022/23 were also increased due to unexpectedly large warehouse stocks reported in July 2023. U.S. production for 2023/24 is forecasted to be 860,000 bales lower this month, primarily in the Southeast and Southwest regions. Consumption remains unchanged, but exports and ending stocks have decreased. The season-average price for upland cotton in 2023/24 is projected to be 80 cents per pound, up 1 cent from the previous month. 

Worldwide cotton projections for 2023/24 show lower beginning stocks, production, consumption, trade, and ending stocks compared to the previous month. In India, cotton sowing has decreased by 3.65 lakh hectares compared to the previous year due to poor rainfall in Gujarat, mill closures, and low stocks of old cotton crops. The new cotton crop has begun arriving in parts of North and South India, with prices above the minimum support price (MSP). Cotton picking will gain momentum post-September 15. The cotton area in Telangana decreased due to unfavourable seasonal conditions, but picking is expected to pick up in November. The government predicts normal rainfall and an increase in cotton crop area for the year 2023-24. In the Rajkot spot market, prices ended at 29327.6 Rupees, a slight gain of 0.03 per cent. 

From a technical standpoint, cotton candy experienced short covering, with open interest dropping by -1.03% to settle at 96, while prices increased by 320 rupees. Support for cotton candy is currently at 61000, with the potential for testing 60850 if it drops below. Resistance is likely at 61300, and a move above that could lead to testing 61450.

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