Cotton settled flat as investors were concerned about Chinese demand.

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Cotton settled flat as investors were concerned about Chinese demand.
Credit: © Reuters.

Cotton candy prices held steady at 60520, with concerns over Chinese demand affecting investor sentiment. The cotton belt in Haryana is battling pink bollworm infestation, adding to market worries. Globally, the cotton industry is grappling with significant reductions in both production and consumption, as indicated in the 2023-24 Cotton Outlook. In the U.S., cotton projections for 2023/24 show increased beginning stocks but decreased production, exports, and ending stocks. Unexpectedly high warehouse stocks in July 2023 led to increased beginning stocks for 2022/23. U.S. cotton production is expected to be 860,000 bales lower this month, with declines in the Southeast and Southwest. 

Consumption remains unchanged, but 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 1 cent from the previous month. Globally, the 2023/24 world cotton projections include reduced beginning stocks, production, consumption, trade, and ending stocks compared to the previous month. India is expected to produce 330-340 lakh bales of cotton in the upcoming 2023-24 season, starting on October 1, according to J. Thulasidharan, president of the Indian Cotton Federation. Sowing has already covered 12.7 million hectares. In the current season, 335 lakh bales of cotton have arrived in the market, with more expected before the season ends. However, cotton cultivation in Telangana faced challenges due to unfavourable seasonal conditions, resulting in reduced cotton area. Cotton picking is set to pick up in northern states in November. In the major spot market of Rajkot, prices closed at 29020.3 Rupees, with a slight drop of -0.09%. 

Technically, the market is undergoing long liquidation, with open interest unchanged at 101. Prices have remained stable at 0 rupees. Support levels for Cottoncandy are at 60260, with the potential for a test of 60000. Resistance is expected at 60780, with a chance of prices testing 61040.

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