MUMBAI (Commoditiescontrol) - The spot prices showed mostly a sideways trend for the the week ended April 6 in limited volume trade.
North India cotton market was mainly influenced by the US cotton futures which showed a bullish trend.
The weekly average price of the benchmark premium variety(30mm) cotton in Maharashtra rose marginally by 0.4% to trade at Rs 40,510/candy while in Gujarat cotton S6(30mm) inched up 0.2% to Rs 41,500/candy. However, other varieties cotton prices dropped by a similar margin. The difference in prices of Gujarat and Maharashtra were attributed to quality available in the market.
Traders were expecting a big revival on the demand side as the country ushered in the new FY 2018/19, however they were left disappointed. The market activity was not completely sluggish but limited in nature as buyers were procuring the commodity to meet their immediate requirement.
Moreover, liquidity crunch, post GST, continued to haunt the textile industry as weavers/power loom traders, garment manufacturers have been procuring raw material on a hand to mouth basis or as per their immediate requirement. Hence, spinners were cautiously making purchases as per requirement. Yarn market witnessed a revival as fresh enquiries raised prices across all counts on April 3. The Coimbatore prices rose by Rs 3/kg across all counts on April 5.
MNCs were more eager to procure the premium variety cotton due to its shortage this season owing to pink bollworm attack. They are now expecting rise in export enquiries from Chinese market after Beijing has imposed 25% import tariff on 106 US commodities, including cotton.
Meanwhile, the Indian cotton shipments turned positive for the first time this season in the month of February with around 10.6 lakh bales (of 170kg) were exported taking the total export shipments to 44.09 lakh bales. (Full Report)
With, India being the second importing market of China after US, there is a higher possibility of rise in exports above average levels in the coming months. On the supply side, cotton arrivals averaged at 1 lakh bales during the week indicating that the supply pressure has eased and returned to average levels of 1.1-1.2 lakh bales usually observed during this period. Total supply during the current week (April 2-6) dropped by 2.8% to an estimated volume of 4.9 lakh bales compared to 5.04 lakh bales in the prior week (March 26-30) and higher 61.7% compared to corresponding week during the last season at 3.03 lakh bales. Total new crop arrivals, since Oct 1, have reached 26.03 million bales (81.3% of total estimated production at 32 million bales), up 4.2% from 24.97 million bales arrived during the same period last year. INDIAN FUTURES MARKET:
Technical Ideas(March): Expect higher range of 20837-21397 to be tested. The peak on C1 chart is at 21280. Expect the peak to be tested in near term with volatility. Support will be at 20493-20277.
Traders long and holding the same can maintain the stop loss at 19850. Higher level can attract resistance and profit booking till the breakout above the peak is not witnessed.
Traders long may take profits at 21111-21280 range as the opportunity arises and assess the situation again if breakout and close above 21280 is witnessed at the end of the week towards the weekly closing.
Conclusion:
Cotton prices have been trading in a tight range of Rs 39,500-43,000/candy since the beginning of the year 2018, with volatility influenced by the trend on the global bourse.
Post Chinese import tariff on US cotton, there is a high possibility of Indian cotton exports to increase in the coming months. Hence, the total export estimates for the season are now raised to 70 lakh bales compared to 60 lakh bales estimated in early January.
This could take prices to an upward trajectory as there is no other fundamental factor leading to a bearish move on cotton prices.
(By Commoditiescontrol Bureau; +91-22-40015534)
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