MUMBAI(Commoditiescontrol): The spot prices took the high road and increased on major tight selling however trade activity was limited on occasion of long weekend of Holi.
.jpg)
The weekly average of the benchmark premium variety cotton in Maharashtra was higher 0.7% to trade at Rs 40,700/candy while the Gujarat S6(30mm) was higher 1% to Rs 41,650/candy. Other variety cotton increased marginally on a weekly basis. The difference in prices of Gujarat and Maharashtra were derived as per quality.
It was a holiday shortened week as most traders were off trading ring on occasion of Holi between March 1-3. Most large spinners/MNCs have replenished their inventories for the next two months hence only the hand to mouth trading spinners were procuring cotton bales amid bull trend on the global futures bourse.
Sellers raised their quotes after observing consecutive 4 session rally on the global futures bourse and weakening USD/INR which fell to a 3-month low on February 28 at 65.11.
The weakened USD/INR and rise in global cotton prices has weakened the basis between the world largest and top exporter US by nearly 2.5% as of March 1. Taking the Gujarat S6 30mm as the benchmark, prices last traded near the 85 cents/lb(CIF) which was at discount by 7.3% compared to Cotlook Index A at 91.70 cents/lb. It was marginally higher 2.5% compared to ICE May futures price at 82.93 cents/lb.
The Chinese market has resumed trading late last weekend and their state reserve auction is scheduled to begin from March 12 onwards. Hence, their closing stock for 2017/18 season will reduce depending on the performance of the auction between March 12-August 31. The closing stock for 2017/18 is forecast at 7.26 million tonnes(42.71 million bales of 170kg)
Hence, their imports could likely rise in the coming months as it is cheaper to import from India compared to US.
Cotton crop supply during the week observed minor improvement and maintained the daily levels of 1.3 lakh bales. Total supply during the holiday shortened week (Feb 26-March 1) declined 23.7% to an estimated volume of 4.81 lakh bales compared to 6.305 lakh bales in the prior week(Feb19-23) and was lower 28.6% compared to same period last year at 6.74 lakh bales. Demonetization delayed supply progress as farmers withheld stocks and offloaded during the first quarter of 2017.
Total supply for the month of February aggregated at 43 lakh bales which took the total supply at 210 lakh bales(mandi+private) with an average daily arrival at 1.4 lakh bales. (Full Report)
INDIAN FUTURES MARKET:
.jpg)
Technical Ideas(March): Traders long and holding the same can maintain the stop loss at 19400. Expect higher range of 20627-21437 to be tested.
Further breakout and close above 21200 can lead to a rally towards 24000. Resistance is at 21100-21200. Initial resistance and profit booking can be witnessed before the breakout above 21200.
Breakout is essential to extend the rise. Add further on breakout and close above 21200. Weaker opening and correction first to 20143-19817 can be used for buying with a stop loss of 19400.
Conclusion:
The market seems to be reluctant to be believe that Indian cotton production estimates at 360-370 lakh bales is overstated. Prices are more influenced by the events of the global market.
Hence, keeping the US cotton market in mind, price range until May would be Rs 40,000/candy and Rs 45,000/candy.
The US cotton market on a long term has a tremendous upside potential and a sudden bull charge like the one seen during mid-May, when prices skyrocketed to 88 cents/lb and Indian cotton prices touched 44,000/candy on average.
There is a lot of bull potential in the market going forward.
(By Commoditiescontrol Bureau; +91-22-40015534)
0 Comments 
Post Comment 
