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Cotton futures up 0.5% to Rs 21,200 per bale on lower global stocks

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

Mumbai / April 22, 2021 / 08:23 PM IST

Cotton futures were trading higher at Rs 21,200 per bale on April 22 as participants increased their long positions as seen from open interest. The agri commodity traded in the positive territory after a gap-up start in the evening session.

The soft commodity has been trading higher than 100 and 200 days’ moving averages but lower than 5, 20 and 50 days’ moving average on the daily chart. The Relative Strength Index (RSI) is at 44.76, which indicates weak momentum in prices.

“Though short term gains could be seen in ICE Cotton, proliferating COVID cases in Asian countries may drag cotton in coming sessions. If ICE Cotton sustains above 86 today, more gains could be expected”, said Mohit Vyas, Analyst at Kotak Securities.

Abhijeet Banerjee, Senior Research Analyst-Agri Research, Religare Broking Ltd said, “Cotton complex markets had registered impressive gains in last few sessions. Under a bullish price scenario, the April month’s USDA report has added fuel to the market from buyers’ perspective. World cotton production is forecast at 113.0 million bales in 2020/21, the smallest in 4 years and the result of lower harvested area. million bales, equivalent to 22 percent of total usage."

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Meanwhile, world cotton stocks (93.5 million bales) are forecast lower in 2020/21, bolstering this season’s cotton price expectations.

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

Cotton arrivals across the country in the first half of April plunged below 31,500 tons, down by 70 percent month-on-month. Arrivals are still better than last year when a complete lockdown around the nation brought the arrivals near 3,000 tons, as per Agmarknet data.

MCX April Cotton trades at a discount of 18 percent from Cotlook A price of 90.20 cents as on Tuesday.

In the futures market, cotton for April delivery touched an intraday high of Rs 21,280 and an intraday low of Rs 21,180 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 April delivery jumped by Rs 110, or 0.52 percent, to Rs 21,200 per bale at 19:38 hours IST on a business turnover of 3,324 lots. The same for May contract gained Rs 90, or 0.42 percent at Rs 21,520 per bale with a business volume of 6,016 lots.

The value of April and May’s contracts traded so far is Rs 70.77 crore and Rs 63.39 crore, respectively.

At 14:10 (GMT), US Cotton futures were slightly up 0.06 percent at 86.28 cents/pound on Intercontinental Exchange (ICE).

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Sandeep Sinha

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