Cotton futures traded weak at Rs 18,250 per bale on October 6.
Demand for cotton has reportedly increased in China due to easing of lockdown, though China has not begun full-fledged buying of US agricultural products based on the Phase I of US-China trade deal.
Sunand Subramaniam, Senior Research at Choice Broking, expects cotton to continue to trade mixed to bullish owing to forecasts of lower production of cotton in Maharashtra and Madhya Pradesh by 15-20 percent. "Reports of crop damage in central and western parts of India has increased worries of a lower yield in the ongoing harvest season, which can reduce the yield of standing crops," he explained.
In the futures market, cotton for October delivery touched an intraday high of Rs 18,300 and a low of Rs 18,190 per bale on the Multi-Commodity Exchange (MCX). So far in the current series, the commodity has touched a low of Rs 16,060 and a high of Rs 18,380.
Cotton futures for October delivery slipped Rs 100, or 0.54 percent, to Rs 18,250 per bale at 16:50 hours IST on a business turnover of 709 lots. The same for November contract fell Rs 120, or 0.65 percent at Rs 18,270 per bale on a business volume of 411 lots.
The value of October and November’s contracts traded so far is Rs 3.73 crore and Rs 2.01 crore, respectively.
On the technical charts, prices have sustained above its upward sloping trend line, which signals optimism in the counter. "MCX October Cotton futures has been trading above its Parabolic SAR, indicating that the bullish trend is intact. Price has sustained above its 50 and 200 day Simple Moving Average, which confirms bullish control. Also, the Super Trend has shown a buy signal indicating strength in the counter."
Subramaniam expects a bullish movement in MCX October Cotton futures with resistance placed at Rs 19,200 levels. "At the lower end, support is placed at Rs 16,700 levels."For all commodities related news, click here