MUMBAI (Commoditiescontrol) - The premium variety cotton prices at major spot markets in the country maintained an upward march while other varieties showed mostly a sideways trend in limited volume trade during the week ended on May 26.
The weekly average price of the benchmark premium variety (30mm) cotton in Maharashtra rose 2% to trade at Rs 42,600/candy while the Gujarat S6 (30mm) increased 2.65% to Rs 43,475/candy. The difference in prices of Gujarat and Maharashtra were attributed to the quality available in the market.
The availability of the premium variety cotton in Maharashtra was very low and farmers resorted to mixing fardar variety into premium variety in order to compensate for low volume, however fardad availability is low as well. Ginners have already liquidated low-medium grade cotton at better rates earlier and now mostly premium grade remains with them.
Sellers having premium cotton restort from selling with expectations of bullish tone to continue due to dwindling supply followed by firm international cues.
Domestic mills as well as exporters have turned active to procure whatever available in the market, but tight supply with slow selling made their job difficult. The depreciation in Indian currency in the last one month has made Indian cotton and cotton yarn attractive and has raised consumption of cotton.
India cotton export, which was earlier pegged at around 70 lakh bales for the season 2017-18 (Oct-Sept) has now revised upwards to 75 lakh bales. CAI, Chairman Atul Ganatra said that weak rupee is expected to support cotton export and it could reach to 75 lakh bales.
Demand in cotton yarn is also said to be better with good domestic as well export enquiries thanks to nearly 2% deprication in Indian rupee, which was last priced at 67.71 against USD.
Further, the Indian cotton prices were very lucrative when compared to other international competitors.
Recently State-owned Cotton Corp of India has dealt 28,000 bales of cotton with Bangladesh at 92 cents per pound, down from 94.95 cents per pound quoted on Cotlook. The nodal agency is expected to export 100,000 bales (1 bale = 170 kg) in the current crop year ending September, as weakness in the rupee and low domestic prices have revived overseas demand for Indian cotton, according to M.M. Chockalingam, director-marketing.
On the supply side, cotton arrivals averaged at around 0.45 lakh bales during the week, down from over 0.48 lakh bales a week ago.
India cotton arrivals as on May 18, 2018 of the current season (2017-18) started from October 2017 rose 2% at 315.47 lakh bales as against 309.40 lakh bales during the same period a year ago, according to Cotton Corporation of India (CCI) latest report. (Full Report)
Around 61.53 lakh bales of cotton is still left as per projected production by CAB at 377 lakh bales. In order to realise the CAB production estimates the daily arrival should averaged at 0.45 lakh bales in the remaining 135 days (By Sept 31, 2018) of the season.
On futures, the benchmark June cotton contract rose 1%, or Rs 230 at Rs 21,440 per bale on the Multi Commodity Exchange Ltd (MCX). Meanwhile the May contract heading for expiry on May 31, settled this week up by 1% at 21,120 per bale. June contract clocked volume and open interest of 2,888 lots and 7802 lots.
TECHNICAL IDEA - MCX COTTON - JUNE: Expect Higher Range To Be Tested
Expect higher range of 21637-22167. The lower top is at 21790.
Further rally can be witnessed if breakout and close above 21790.
If that happens then expect a rally to 23140.
(By Commoditiescontrol Bureau; +91-22-40015533)