Cotton futures traded firm at Rs 19,820 per bale on October 21 as participants widened their positions, as seen from the open interest. Cotton futures in the domestic market have surged over 8 percent since the beginning of October.
"The fundamentals remain inclined towards bulls as the recent rally in Intercontinental Exchange and ZCE futures, and crop damage news in major cotton-producing states provide a strong floor to cotton in the near future," said Mohit Vyas, analyst at Kotak Securities.
The prospects of a better cotton export from India amid lower world cotton output and attractive Indian cotton prices, limited new crop arrival in mandis and the Cotton Corporation of India (CCI) procurement at the minimum support price (MSP) are adding fuel to the rally, he said.
Indian cotton is trading at a 4 percent discount from Cotlook A exchange prices of 75.40 cents as on October 20.
In the futures market, cotton for October delivery touched an intraday high of Rs 19,850 and an intraday low of Rs 19,520 per bale on the MCX. So far in the current series, the commodity has touched a low of Rs 16,060 and a high of Rs 19,930.
Cotton futures for October delivery gained Rs 210, or 1.07 percent, to Rs 19,820 per bale at 8:17 pm on a business turnover of 834 lots. The same for November contract jumped Rs 130, or 0.65 percent, to Rs 19,980 per bale with a business volume of 839 lots.
The value of October and November’s contracts traded so far is Rs 15.99 crore and Rs 20.23 crore respectively.
Kotak Securities expects cotton to trade range-bound with positive bias for the near future.
Geojit Financial Services said that mild profit booking cannot be ruled out before a resumption of the next wave of upside moves.For all commodities related news, click here