Commodity Trading Tips for Cotton by Kedia Commodity

Cotton prices gained on strong demand from bulk consumers. Demand of the fibre has improved steeply in last few weeks as exporters are actively buying cotton to meet their export commitments which was made earlier during starting of the marketing year in October. Similarly, below average supply of cotton in current season also keeping demand higher at physical market. Brazilian cotton prices are likely to be firm in 2017 amid lower output of harvested cotton from the 2015-16 crop and lower ending stocks of the same crop. According to CONAB, 2017 began with cotton inventories at only 162,900 tons, the lowest level since 2010-11 and although an increase in the 2016-17 crop is expected, availability of cotton in the market is estimated at 1.6 million tons, a volume last observed in the 2009-10 season. Cotton consumption is estimated at 750,000 tons in the 2016-17 season, up 4.2 per cent compared to the previous season, while exports are projected to decline 5.6 per cent compared to 2015-16. In the 2016-17 cotton marketing year, US cotton exports are likely to increase by 35 per cent. US market share of world cotton trade is forecast to increase as exports have increased 66 per cent year on year in the first five months of the current marketing year. The higher cotton export growth was mainly due to higher exports to China, Indonesia, Vietnam and other small countries. Technically market is under short covering as market has witnessed drop in open interest by -15.79% to settled at 3078 while prices up 40 rupee, now Cotton is getting support at 20103.4 and below same could see a test of 20006.7 level, And resistance is now likely to be seen at 20263.4, a move above could see prices testing 20326.7.

Trading Ideas:

Cotton trading range for the day is 20007-20327.

Cotton prices gained on strong demand from bulk consumers.

Similarly, below average supply of cotton in current season also keeping demand higher at physical market.

Cotton consumption is estimated at 750,000 tons in the 2016-17 season, up 4.2 per cent compared to the previous season

Cotton prices in spot market gained by 120.00 rupees and settled at 20260.00 rupees.