Cotton gains as CAI reduces their cotton output projection for the current season

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Cotton gains as CAI reduces their cotton output projection for the current season
Credit: © Reuters.

Cotton candy futures posted a marginal gain, closing up by 0.24% at 57300. The Cotton Association of India (CAI) revised its cotton production estimate for the current 2023/2024 season to 29.4 million bales, citing damage in Haryana caused by pink bollworm infestation and farmers uprooting plants. Additionally, a significant decline in cotton production by 25% is anticipated in north Maharashtra due to inadequate rainfall. The USDA's November World Agricultural Supply and Demand Estimates report presented a mixed picture of the global cotton market. While the report increased the anticipated U.S. production in 2023/24 by 273,000 bales, it also raised global ending stocks by 1.6 million bales.

The 2023/24 U.S. cotton balance sheet showed slightly lower consumption but higher production and ending stocks. Production was 273,000 bales higher, at 13.1 million bales, with lower production in Texas more than offset elsewhere. CAI released its final estimate of crop production for the 2022-23 season, pegging it slightly higher at 31.8 million bales. This contrasts with the government’s third advance estimate of 34.3 million bales for the 2022-23 season. In north Maharashtra, where normal annual cotton production is about 20 lakh tonnes, a decline of 25% is expected this year due to inadequate rainfall. Cotton production may fall to 15 lakh tonnes, according to state agriculture officials. In the Rajkot spot market, cotton prices ended at 26756.9 Rupees, dropping by -0.06%.

Technically, the cotton market is under fresh buying pressure, witnessing a gain in open interest by 3.52% to settle at 147. Support is identified at 57200, and a breach could test 57110, while resistance is likely at 57380, with a move above potentially leading to testing 57470.

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