Cotton futures traded firm at Rs 22,130 per bale on May 17 as participants rolled over their bullish positions as seen from open interest. The agri-commodity traded in the green after a gap-down start on firm global cues.
On the MCX, Cotton futures for May delivery gained Rs 80, or 0.36 percent, to Rs 22,130 per bale at 16:03 hours IST on a business turnover of 6,074 lots. The same for June contract rose Rs 30, or 0.13 percent at Rs 22,390 per bale with a business volume of 3,418 lots.
The value of May and June’s contracts traded so far is Rs 19.75 crore and Rs 11.40 crore respectively.
Mohit Vyas, Analyst at Kotak Securities said, “On a weekly basis, MCX managed to post around 1 percent gains in the second week of May against an 8 percent steep fall in ICE Cotton Futures. Cotton Association of India (CAI) revising higher Indian cotton export estimates for 2020-21 season at 65 lakh bales against 60 lakh bales projected till last month have helped domestic cotton to elude sell-off in the overseas market last week.”
CAI has lowered Indian cotton consumption estimates by 15 lakh bales, which is negative for cotton prices.
MCX May Cotton trade at a discount of 14 percent from Cotlook A price of 93.40 cents as on Thursday.
Cotton production in Haryana is expected to decline by 27 percent to 1.8 million bales in 2020-21 (July-June) season due to yield loss caused by Parawilt, Geojit Financial Service said in a note. Parawilt is a disease affecting cotton plants, which causes sudden drooping of leaves when irrigation is provided after a long dry spell.
Geojit Financial Service said, “If prices sustain to trade above Rs 22,100/bale, there could be a pullback to Rs 22,400-22,500 levels. Else, we could see downside corrective moves.”
Despite slower crop sowing, some profit booking was triggered following sell-off in other major agri-commodities, said Kotak Securities.
The soft commodity has been trading higher than 20, 50, 100 and 200 days’ moving averages but lower than the 5-day moving average on the daily chart. The momentum indicator Relative Strength Index (RSI) is at 57.46 which indicates positive movement in prices.
At 1049 (GMT), US Cotton futures was up 1.10 percent quoting at 83.34 cents/pound on Intercontinental Exchange (ICE).
Source:moneycontrol.com