Cotton prices gains as India's cotton production in 2023/24 is likely to fall 7.5%

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Cotton prices gains as India's cotton production in 2023/24 is likely to fall 7.5%
Credit: © Reuters.

Cottoncandy experienced a marginal gain of 0.07%, settling at 56740, influenced by factors impacting global cotton production. India, a significant player in the cotton market, is expected to witness a 7.5% decline in cotton production for 2023/24 to 29.5 million bales. Lower planted areas and the impact of El Niño weather conditions on productivity are cited as contributing factors. 

The Cotton Association of India (CAI) projects an increase in imports to 2.2 million bales, up from the previous year's 1.25 million bales. In the United States, the cotton balance sheet for 2023/24 indicates slightly lower consumption, but higher production and ending stocks. Production is expected to reach 13.1 million bales, with ending stocks at 3.2 million bales, reflecting 22.5% of use. The global cotton balance sheet for the same period shows lower consumption but higher production and stocks. India's 2022/23 production is revised higher, impacting global beginning stocks. The CAI's final estimate for India's 2022-23 cotton crop production is slightly higher at 31.8 million bales compared to the initial estimates. However, this figure is below the government's third advance estimate of 34.3 million bales. A noteworthy decline in cotton production by 25% is anticipated in north Maharashtra due to inadequate rainfall, impacting the normal annual production of 20 lakh tonnes. In the Rajkot spot market, a significant trading hub, cotton prices ended at 27020.3 Rupees, reflecting a -0.15% decrease. 

Technically, the market is undergoing short covering, evident in a 12.35% drop in open interest, settling at 71. Support is identified at 56580, with a potential test at 56420 on the downside. Resistance is anticipated at 56900, and a breakthrough could lead to a test of 57060.

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