Cotton prices experienced a decline of 0.39% yesterday, settling at 60640 rupees, driven by several factors affecting the global cotton market. The Cotton Association of India (CAI) revised its cotton production estimates upwards for the current season, projecting an increase to 309.70 lakh bales, contributing to increased supply expectations. Similarly, the Cotton Corporation of India (CCI) also raised its crop production estimates, further adding to the anticipated surplus in the market. Moreover, the International Cotton Exchange (ICE (NYSE: ICE )) witnessed a drop in prices due to lower demand from mills alongside the increased supply outlook. Notably, Cotton Australia revised its production estimate upwards following favourable weather conditions, contributing to the global surplus.
In the United States, cotton production forecasts for the current season have been reduced based on recent reports, leading to lower ending stocks. Despite the increase in global cotton production, the Southern India Mills’ Association (SIMA) urged textile mills not to panic-buy cotton due to recent price hikes. Prices of domestic cotton witnessed a significant increase, prompting concerns within the industry. However, the Committee on Cotton Production and Consumption estimated domestic consumption to be in line with production figures.
Technically, the cotton market observed long liquidation, with a drop in open interest by 11.2% and prices decreasing by 240 rupees. Currently, Cottoncandy finds support at 60420 rupees, with a potential downside test at 60210 rupees. Resistance levels are anticipated at 60880 rupees, with a move above potentially leading to prices testing 61130 rupees.