Cotton settle flat amid subdued global demand and recession fears
Cotton yesterday settled up by 0.03% at 61360 amid subdued global demand and recession fears. The latest USDA weekly export sales report showed net sales dropped to 114,500 running bales for 2022/2023, down 33% from the previous week and 57% from the prior 4-week average. Meanwhile, in its March report, the US Department of Agriculture predicted weaker world consumption due to reductions in Turkey, Pakistan, Indonesia, and Bangladesh. At the same time, the USDA raised the US ending stocks estimates for the 2022/23 crop year and lifted the production outlook thanks to higher output in China, Australia, and Uzbekistan, which more than offset India’s lower crop.
Cotton stocks in India could fall by nearly 16% in 2022/23 from a year earlier to their lowest level in nearly two decades as adverse weather curtailed crop yields. Lower stockpiles will limit exports from the world's biggest producer in the next marketing year starting from Oct. 1 and support global prices. Cotton stocks at the end of the 2022/23 marketing year could fall to 2.69 million bales, the lowest since 2003/04, the Cotton Association of India (CAI) said. India is likely to produce 31.3 million bales of cotton in the current season ending on Sept. 30, down 2.6% from an earlier estimate, the CAI said. Driven by record-high cotton prices amid a global shortage last year, New Delhi’s cotton import bill surged 200% to surpass the $1bn mark in the 10 months to January, official data showed. While cotton prices have since eased due to a global demand slowdown, experts are worried about domestic production. Stagnant cotton production is especially worrying as prices of textiles have risen consistently over the last three years, the Economic Survey 2023 said, adding that clothing and footwear were among the major contributors to headline inflation in FY23.
Technically market is under short covering as the market has witnessed a drop in open interest by -1.88% to settle at 209 while prices are up 20 rupees, now Cotton is getting support at 61220 and below same could see a test of 61090 levels, and resistance is now likely to be seen at 61440, a move above could see prices testing 61530.
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