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Cotton futures dip marginally to Rs 21,780 per bale on weak global cues

The momentum indicator Relative Strength Index is at 54.69 which indicates upbeat movement in prices.

Mumbai / April 26, 2021 / 04:51 PM IST
Source: Reuters

Source: Reuters

Cotton futures traded marginally weaker at Rs 21,780 per bale on April 26 as participants increased their short positions as seen from open interest. Natural fibre had gained Rs 410, or 1.91 percent last week on the MCX.

The agri commodity pared gains after a gap-up start on a negative global trend.

The soft commodity has been trading higher than 5, 20, 50, 100 and 200 days’ moving averages on the daily chart. The momentum indicator Relative Strength Index (RSI) is at 54.69 which indicates upbeat movement in prices.

Textile supply chains have recovered following the most acute phase of the COVID-related disruption; many spinners have enjoyed good profits and some have been adding new capacity.

Abhijeet Banerjee, Senior Research Analyst-Agri Research, Religare Broking Ltd said, “Cotton ended the week on a positive note and posted moderate gains on Friday. A strong trend in global markets supported the trend. The world cotton stocks (93.5 million bales) are forecast lower in 2020/21, bolstering this season’s cotton price expectations.”

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The global stock reduction is supportive of cotton prices, particularly in an expanding global economy with rising world cotton mill use, he said.

MCX April Cotton trade at a discount of 15 percent from Cotlook A price of 92.20 cents as on Thursday.

In the futures market, cotton for May delivery touched an intraday high of Rs 21,960 and an intraday low of Rs 21,710 per bale on the MCX. So far in the current series, the commodity has touched a low of Rs 20,680 and a high of Rs 22,950.

Cotton futures for May delivery dropped Rs 70, or 0.32 percent, to Rs 21,780 per bale at 16:22 hours IST on a business turnover of 8,150 lots. The same for June contract gained Rs 70, or 0.32 percent at Rs 22,190 per bale with a business volume of 58 lots.

The value of May and June’s contracts traded so far is Rs 100.48 crore and Rs 0.11 crore respectively.

Though short term gains could be seen in ICE Cotton, rising COVID cases in Asian countries may drag cotton from higher levels in coming sessions, said Kotak Securities.

At 1054 (GMT), US Cotton futures were down 0.99 percent quoting at 87.92 cents/pound on Intercontinental Exchange (ICE).

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Sandeep Sinha

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