Cotton futures were trading lower at Rs 21,970 per bale on March 12. Prices had jumped 1 percent yesterday to settle at Rs 22,110/bale on the MCX.
The agri commodity traded in the negative territory after a flat to gap-up start in the afternoon session tracking negative 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 56.84 which indicates positive momentum in prices.
“Apart from recovery in ICE Cotton, historically high prices of edible oil in the home country and persistent rise in yarn prices following recovery in the textile industry has also helped cotton to recover yesterday after a sharp drop on Wednesday,” said Mohit Vyas, Analyst at Kotak Securities.
USDA has kept production and consumption figures steady for India in the March WASDE report, but increased Indian Cotton export estimates to 57 million bales of 480 lbs compared to 50 lakh bales pegged earlier, which was already factored in by the market.
MCX March Cotton trade at a discount of 10 percent from Cotlook A price of 90.15 cents as on Wednesday.
The International Cotton Advisory Committee has scaled up its forecast for global prices in 2020-21 (August-July), as ending stocks for the ongoing season are estimated to be lower. The committee has revised upwards its price forecast for Cotlook A Index, global ending stocks for the season is estimated at 21.1 million tonnes, compared with 21.4 million tonnes the previous season.
In the futures market, cotton for March delivery touched an intraday high of Rs 22,160 and an intraday low of Rs 21,960 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 slipped Rs 100, or 0.45 percent, to Rs 21,970 per bale at 15:07 hours IST on a business turnover of 6,927 lots. The same for April contract dropped Rs 120, or 0.53 percent at Rs 22,340 per bale with a business volume of 4,195 lots.
The value of March and April’s contracts traded so far is Rs 33.16 crore and Rs 23.56 crore respectively.
Geojit Financial Services said if prices hold the support of Rs 21,880 we could see pullbacks towards Rs 22,200-22,300 levels.
At 09:40 (GMT), US Cotton futures was down 1.74 percent quoting at 86.81 cents/pound on Intercontinental Exchange (ICE).
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