By admin       2016-09-22

Cotton complex closed lower on Tuesday on technical corrections. However, reports of lower supplies from new season crop and expectation of lower cotton production in the country may support prices at higher levels. NCDEX Kapas for Apr’17 closed 0.38% lower while MCX Oct’16 cotton closed down by 0.34%. India, which was the largest producer of cotton in 2014-15, has seen the crop stock dwindle, leading to competition between exporters and the textile industry, which has been forced to import at the end of the season. India’s exports will be at their lowest level since 2008/09 falling 30 %or 1.9 million bales. Domestic update As per latest estimate by government, cotton is planted in 102 lh in the country, down by 11.3% against 115.2 lh last year as on 16 Sep. In Gujarat, the top cotton producing state, the crop had been across 23.8 lh ,down 13.8% from a year ago. In Maharashtra, the largest area under cotton, the acreage was at 38.0 lh, slightly down from around 38.2 lh a year ago. According to USDA, cotton production in the country expected at seven-year low in 2016-17 of 5.8 mt due to lower area under cultivation and pest attacks in top producer states. Global Cotton Updates Cotton futures surged over 3 percent on Tuesday, buoyed by technical buying as the market broke through the 70-cent level for the first time in over a month amid concerns that rain may delay crop harvest in top producer China. Forecasts of rains that could hurt crops in certain cotton producing belts across the globe also fueled speculative buying. Outlook We expect cotton prices may trade sideways as market is expecting new season crop. Forecast of better weather across cotton sowing states like Gujarat and Maharashtra also pressurize the prices when arrival season begins. However, firm cotton in International market may support cotton prices.

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