Spot Cotton Oil Cake Likely To Trade Higher Next Week

MUMBAI(Commoditiescontrol) – Cotton Oil Cake price gains at benchmark market Kadi amid improving demand during the week ending 25, February.

Cotton oil cake price gained by Rs 70 to Rs 2,290/100kg in Kadi on account of improving demand from stockiest whereas price has declined by Rs 35 during February month.

A trader from Kadi said that stockiest and cattle feed manufacturer demand has increased as the prices were trading at lower levels.

Stockiest are more aggressive buyers than cattle feed manufacturer as they think prices are at very lucrative level and are unlikely to witness sharp fall from current level.

Liquidity has improved in the market which is allowing stockiest to buy aggressively.

Supply of raw material i.e. cotton seed was on lower side for whole season as farmers are reluctant to offload the stock as they think that price will increase in near term.

However retail demand is likely to decrease in coming months as cattle consumes less feed during summer season, so the rally in cotton oil cake will be driven by stockiest.

He noted “Majority of the cattle feed manufacture have completed bulk buying of cotton oil cake around Rs 2,020/100kg.”

Prices of Cottonseed in Kadi are trading in the range of Rs 2,625-2,675/100kg up by Rs 75 on previous session.

The rally in both cotton oil cake and cotton seed is based on the rumour of lower crop i.e. 300 lakh bales anticipated by market participants whereas CCI is estimating 341 lakh bales.

In 2015-16 the production of cotton oil cake was around 82 lakh tonnes and demand was 85 lakh tonnes so the prices of cotton cake rallied last year but in 2016-17 season if market rumours are considered to be true about the lower cotton crop of around 300 lakh bales this season then the production of cotton cake drops to 72 lakh tonne which is a decline of 12 percent over last year but the demand is considered to decline by 20 percent to 68 lakh tonne due to higher availability of other cattle feed products such as Tur churi, Bajara churi, Chana Churi, Guar Churi and Maize churi and cost of these products is in the range of Rs 1500-1700/100kg which will weigh on cotton oil cake prices in coming months.

Cattle feed manufacturer may change the composition of cattle feed and replace cotton oil cake with above mentioned churi’s to some extent so price of cotton oil cake this year may not prosper like last year.

So the rally in cotton oil cake may terminate any time as it is fundamentally not justifiable.

In near term both cotton oil cake and cotton seed prices are likely to rally sharply due to lower supply.