Cotton futures were trading lower at Rs 21,510 per bale on April 16 as participants trimmed their positions as seen from the open interest. Prices had gained Rs 90 or 0.42 percent April 15 to settle at Rs 21,770/bale on the MCX.
The agri commodity extended decline to trade at day’s low after a gap-up start in the evening session, tracking the negative global trend.
The soft commodity has been trading higher than 20, 100 and 200 days’ moving averages but lower than the 5 and 50 days’ moving averages on the daily chart. The momentum indicator Relative Strength Index (RSI) is at 50.53 which indicates sideways movement in prices.
“Though short term gains could be seen in cotton, proliferating COVID cases in Asian countries may drag natural fibre in coming sessions. Fresh buying in the cotton could be seen once it breaches 86 cents level on daily basis”, said Mohit Vyas, Analyst at Kotak Securities.
The Cotton Association of India (CAI) projected cotton exports to rise by 20 percent to 60 lakh bales in the 2020-21 season that begins in October, on account of higher international prices. India has shipped around 4.3 million bales till March, it said.
The US Department of Agriculture has scaled down the global cotton ending stock estimate for 2020-21 (August-July) to 93.5 million bales from 94.6 million bales pegged in March. The downward revision in stocks is mainly due to lower production and higher consumption estimates.
MCX April Cotton trades at a discount of 13 percent from Cotlook A price of 89.10 cents as on Wednesday.
In the futures market, cotton for April delivery touched an intraday high of Rs 21,900 and an intraday low of Rs 21,540 per bale on the MCX. So far in the current series, the commodity has touched a low of Rs 20,340 and a high of Rs 22,760.
Cotton futures for March delivery fell by Rs 270, or 1.24 percent, to Rs 21,510 per bale at 18:55 hours IST on a business turnover of 5,767 lots. The same for May contract dropped by Rs 260, or 1.18 percent to Rs 21,840 per bale with a business volume of 3,383 lots.
The value of April and May’s contracts traded so far is Rs 59.02 crore and Rs 42.73 crore, respectively.
Geojit Financial Services said, “Prices penetrated the resistance and sustain to trade above Rs 21,740 and could see more upside moves targeting Rs 22,000-22,100 levels.”
At 13:28 (GMT), US Cotton futures were down 1.27 percent to trade at 83.94 cents/pound on Intercontinental Exchange (ICE).
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