MUMBAI(Commoditiescontrol): The premium variety cotton prices at major markets in the country ruled firm for the fourth consecutive week on good demand, although gains were marginal this week. Meanwhile other varieties showed mostly a sideways trend in limited volume trade.
The weekly average price of the benchmark premium variety (30mm) cotton in Maharashtra dropped 0.3% to trade at Rs 41,340/candy while the Gujarat S6 (30mm) increased by nearly 1% to Rs 42,500/candy. The difference in prices of Gujarat and Maharashtra were mainly due to quality.
Good business was witnessed in domestic market owing to firm demand for cotton by the mills and exporters. Mills were engaged in replenishing stocks to meet future demand; however, they are looking for premium quality, which is difficult job for them amid tight availability.
Good demand in garments and yarn have helped cotton market to strengthen, according to trade experts.
Export demand continued to remain robust in recent months amid competitive rates in the international market has attracted overseas buyers, mainly Bangladesh, Vietnam and Pakistan. Chinese buying was observed bit on the slower side.
The export sector of the textile industry benefitted more this season on supportive USD/INR which depreciated to more than 1 year low breaching the key 67 level earlier this week and last traded at 66.50.
Further, the Indian cotton prices were very lucrative when compared to other international competitors.
On the supply side, cotton arrivals averaged at 0.7 lakh bales during the week due to slowing down gradually at the fag end of the supply season.
Total new crop arrivals, since Oct 1, have reached 28.08 million bales (87.5% of total estimated production at 32 million bales), up 3.5% from 26.04 million bales arrived during the same period last year.
Technical Ideas(May): Resistance is at 20893-21280. On breakout and close above 21280 expect a rally to 24100.
Support will be at 20380-19850-19400. Traders may witness profit booking till breakout and weekly close above 21280 is not witnessed.
Correction towards DRV cannot be ruled out if fails to sustain above 21280 in near term to short term.
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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.
The premium variety cotton will maintain an upward trajectory and could crawl to touch the resistance level of Rs 43,000/candy as the season ends, observing the present factors in the market.
From the domestic fundamental point of view, export prospects are positive and price supportive hence this could be the only driving factor for prices to maintain an upward trajectory as domestic spinners were unlikely to make sizeable procurement until the liquidity issues in the market is resolved from domestic fundamental point of view.
(By Commoditiescontrol Bureau; +91-22-40015533)
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