Cotton faced a slight dip of -0.3% yesterday, closing at 60520, largely due to concerns about demand from China, which weighed on investor sentiment. Additionally, the cotton belt in Haryana is grappling with an infestation of pink bollworms, adding to uncertainties in the cotton market. The global cotton industry is experiencing significant reductions in both production and consumption, as outlined in the 2023-24 outlook for cotton.
In the U.S., the projections for 2023/24 include higher beginning stocks but lower production, exports, and ending stocks. Unexpectedly large warehouse stocks reported for July 31, 2023, influenced the beginning stocks for 2022/23. U.S. cotton production is forecasted to decrease by 860,000 bales this month, with declines in the Southeast and Southwest regions. While consumption remains unchanged, exports are down by 200,000 bales, and ending stocks are 100,000 bales lower. The projected season-average price for upland cotton in 2023/24 is 80 cents per pound, up by 1 cent from the previous month.
On the global stage, the 2023/24 world cotton projections indicate lower beginning stocks, production, consumption, trade, and ending stocks compared to the previous month's report. India expects to produce 330 to 340 lakh bales (each 170 kg) of cotton in the upcoming 2023-2024 cotton season, beginning on October 1. This announcement was made by J. Thulasidharan, President of the Indian Cotton Federation, who also mentioned that cotton sowing had surpassed 12.7 million hectares. In the current season, 335 lakh bales of cotton have already entered the market, with more arriving. Cotton cultivation in Telangana saw a slight reduction due to unfavourable seasonal conditions in certain areas. Cotton picking is expected to gain momentum in the state in the coming weeks.
From a technical perspective, the market is experiencing fresh selling, with a 1% increase in open interest, settling at 101. Prices have dropped by -180 rupees. Cotton is currently finding support at 60320, and if it falls below this level, it could test 60110. On the upside, resistance is likely at 60720, and a breakthrough could push prices to 60910.
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