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Cotton futures slip 0.86% to Rs 21,890 per bale, outlook bullish

The soft commodity has been trading higher than 20, 50, 100 and 200 days' moving averages, but lower than the 5-day moving average on the daily chart.

Mumbai / March 10, 2021 / 03:43 PM IST

Cotton futures were trading lower at Rs 21,890 per bale on March 10 as participants reduced their positions as seen from open interest. Prices had fallen 0.7 percent on March 9 to settle at Rs 22,080/bale on the MCX.

The agri commodity recovered losses after a gap-down start in the afternoon session, tracking positive global cues.

The soft commodity has been trading higher than 20, 50, 100 and 200 days' moving averages, but lower than the 5-day moving average on the daily chart. The Relative Strength Index (RSI) is at 53.85 which indicates positive momentum in prices.

“As per our expectation some profit booking has triggered in cotton after multiple months of one-side rally and weaker than expected data published by USDA in March month WASDE report is likely to add some pressure in natural fibre in coming sessions," said Mohit Vyas, Analyst at Kotak Securities.

MCX March Cotton traded at a discount of 13 percent from Cotlook A price of 93.15 cents as on March 8.

Sunand Subramaniam, Senior Research Associate, Choice Broking, said, “Fundamentally for the month ahead, we expect MCX Cotton futures to continue to trade bullish as Cotton Corporation of India is planning 75 lakh bales total exports in coming month with a revival of demand from China and Bangladesh. Moreover, since we are in the post-harvest season, the arrivals have started to decline from 3 lakh bales to 1.25-1.75 lakh bales daily.”

“As the demand is increasing the traders are offering a better price than the CCI and are purchasing cotton from farmers. Market experts forecast for lower producton, higher exports and lower ending stocks in the United States with a further decline in production and ending stocks at the global levels”, he said.

In the futures market, cotton for March delivery touched an intraday high of Rs 22,000 and an intraday low of Rs 21,720 per bale on the MCX. So far in the current series, the commodity has touched a low of Rs 21,170 and a high of Rs 22,540.

Cotton futures for March delivery dropped Rs 190, or 0.86 percent, to Rs 21,890 per bale at 15:01 hours IST on a business turnover of 7,330 lots. The same for April contract slipped Rs 190, or 0.85 percent at Rs 22,230 per bale with a business volume of 3,751 lots.

The value of March and April’s contracts traded so far is Rs 52.98 crore and Rs 25.15 crore, respectively.

Subramaniam expects an uptrend in cotton future for the long term prospect. On the higher side, the price may find resistance at Rs 23,500 or on the downside it may test the support of Rs 21,200 levels.

At 09:34 (GMT), US Cotton futures soared 0.42 percent quoting at 84.68 cents/pound on Intercontinental Exchange (ICE).

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Sandeep Sinha
first published: Mar 10, 2021 03:43 pm