Spot Cottonoil Cake To Trade with a Bearish Bias - Weekly 24th June

MUMBAI (Commoditiescontrol) – Cotton oil cake in the Spot market exhibited a bearish tone in the week ended June 24, amid sales of old stock by the stockiest which they were holding in their inventory from a long time coupled with poor demand from cattle feed manufacturer.

Prices declined by Rs 100 to trade at Rs 1745/100kg in benchmark Kadi market of Gujarat.

Early during the week, prices dropped due to stockiest selling and absence of demand from feed manufactures.

Although, Cottonoil Cake prices have declined by nearly 26.70 % in past 4 months, it was unable to attract the cattle feed manufacturers to buy in bulk quantities.

Stockiest are still holding huge quantity of stock and it is likely they will liquidate the stock in coming days.

Cotton oil cake futures followed the trend of physical market. Cottonseed oil cake July futures prices during the week on NCDEX has declined by 6.90 percent to close at Rs 1,635/100kg and contract made a fresh four-month low of Rs 1,611/100kg on June 23.

Meanwhile, the major factor which is weighing on the market sentiment is the on-going sowing progress of Cotton which has increased by 29.50% over last year on all India basis.

Expectation of higher production of cotton amid rise in sowing acreage in 2017-18 has limited any gains in cotton oil cake price in past few sessions. If cotton production increases then the availability of raw material i.e. cotton seed is likely to increase which will weigh on cotton oil cake prices.

The other factor which the stockiest and traders are closely watching is the progress of monsoon. Monsoon has been delayed by one week in Gujarat and Madhya Pradesh, which is likely to reach by 26-28th June but if it is delayed beyond 28th then the price of cotton oil cake may get support at lower price level. Gujarat and Madhya Pradesh are the major consuming states of cotton oil cake.

During monsoon season availability of green grass is good so most of the farmers use green grass in their cattle feed composition which reduces the consumption of cotton oil cake to certain extent.

There has been a drop in the consumption pattern for cotton oil cake by 30% since October 2016 as consumers shifted to other substitutes such as Tur churi, Bajara churi, Guar churi and Chana churi which were priced way lower in the range of Rs 1200 -Rs 1500 / 100Kgs and are still available at the same price.

For the coming week, Cotton oil cake will trade with a bearish bias amid good new crop cotton sowing, ample inventory with the stockiest and lower demand from the cattle feed industry.

(By Commodities control Bureau; +91-22- 40015516)