Cotton futures were trading lower at Rs 21,190 per bale on March 22 on weak global cues, a stronger dollar and selloff in crude oil. Prices had fallen 1.5 percent yesterday to settle at Rs 21,270/bale on the MCX.
The agri commodity traded in the negative territory after a gap-down start in the evening session.
The soft commodity has been trading higher than 100 and 200 days' moving averages but lower than 50, 20 and 5 days’ moving average on the daily chart. The Relative Strength Index (RSI) is at 35.59 which indicates weak momentum in prices.
“ICE Cotton futures have declined in six out of seven sessions, which dragged domestic cotton from a multi-year high level. Besides, rising cases of COVID in the home country as well as across the globe and market news of Cotton Corporation of India lowering its selling prices have added a negative sentiment in natural fibre,” said Mohit Vyas, Analyst at Kotak Securities.
The sell-off in the broader equity market, worries over US-China trade relations, the recent drop in crude oil and many EU nations resorting to fresh lockdown have kept cotton under pressure over the past many days.
MCX March Cotton trade at a discount of 14 percent from Cotlook A price of 91.25 cents as on Friday.
In the futures market, cotton for March delivery touched an intraday high of Rs 21,340 and an intraday low of Rs 21,140 per bale on the MCX. So far in the current series, the commodity has touched a low of Rs 21,140 and a high of Rs 22,540.
Cotton futures for March delivery dipped Rs 80, or 0.37 percent, to Rs 21,190 per bale at 16:49 hours IST on a business turnover of 3,721 lots. The same for April contract dropped Rs 80, or 0.37 percent at Rs 21,530 per bale with a business volume of 7,144 lots.
The value of March and April contracts traded so far is Rs 41.43 crore and Rs 42.60 crore, respectively.
Geojit Financial Services said downside corrective moves are more likely to continue towards Rs 21,200-21,000 levels.
At 11:21 (GMT), US Cotton futures were down 0.40 percent quoting at 84.28 cents/pound on Intercontinental Exchange (ICE).
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