MCX Cotton October may trade in Rs 20600-19500 range: Angel
According to the Angel Commodities MCX cotton October contract is expected to trade in the range of Rs 20600 and Rs 19500 per bale in the short term (1 month). On the other hand, NCDEX Kapas April 2014 contract may trade in the range of Rs 950 and Rs 1036 per 20 kgs in the short term.
July 19, 2013 / 12:01 IST
Cotton updates by Angel Commodities
Cotton production in India declined by 4 percent in 2012-13 season on the back of drought situation in the two major producing states, Gujarat and Maharashtra, which hampered yield. However, considering rainfall in the current season, we expect cotton production to increase in the coming year and may boost exports form the country. Although estimated output at 34 lakh bales is lower compared to record 35.5 million bales in 2011-12, overall availability was marginally lower as India imported 2.5 million bales in 2012-13 season. On the consumption front, mill consumption is estimated 12 percent higher in 2012-13 season but exports are estimated to decline drastically.Despite lower opening stocks for next season which shall commence in October 2013, we expect supplies to remain at comfortable level on the back of higher output. Comfortable supplies in the domestic markets and output concerns in the largest exporting nation, US may boost exports of cotton and yarn to major markets, which include the world's biggest importer, China, as well as Bangladesh, Indonesia and Vietnam.Outlook
Cotton season is nearing its end and almost 96 percent (or 328 lakh bales) of the crop has arrived in the markets till mid July. The Cotton Corporation of India, the ginners, traders, and exporters have sizeable quantity of cotton with them to meet export commitments. Thus, despite higher Cotton yarn export registration, no major upside in the prices is expected in the near term.With monsoon being favorable so far and planting figures reflecting higher area under cultivation, we expect cotton output to increase in the coming season keeping prices under the grip of bears in the medium term. Further, early sowing will also ensure early harvesting of the crop which shall commence in September from North Indian states and in October from central India.Apart from domestic fundamentals, it is important to keep close watch on US Cotton output, which is currently expected lower on account of a sharp drop in acreage and unfavorable weather in the major cotton belt. Further, world cotton consumption is set to grow for second straight year in row while production is expected to fall further. However, with huge global stock piles, upside in the global cotton prices will be capped.Thus, considering domestic and international fundamental factors, we expect MCX cotton October contract to trade in the range of Rs 20600 and Rs 19500 per bale in the short term (1 month). On the other hand, NCDEX Kapas April 2014 contract may trade in the range of Rs 950 and Rs 1036 per 20 kgs in the short term.Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. 
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