Angel Commodities’ commodity report on Cotton
MCX cotton fell more than 1.2% on Tuesday on anticipation of good production in the next season as sowing progress in the country starts in a brisk manner. As per latest data from Agricultural Ministry, cotton is planted in 14.1 lakh hectares (l ha) till last week , higher by 43 % compared to last year acreage of 9.87 l ha for same period. In Haryana, acreage was at 630,000 ha, up 28% on year, while in Punjab, the area under cotton was up 52% at 382,000 ha, the data showed. As per ICAC, Cotton area in India is forecast to expand by 7% to 11.3 million hectares, and production could increase by 3% to 6 mt in 2017/18. ICE futures dropped to their lowest since end – January on Tuesday on expectations of a robust harvest. Moreover, lower U.S. export outlook for the new crop, weighed on the prices. Net upland sales for the 2016 – 17 crop last week was totaled 82,700 running bales, down 26% from the previous week. US sowing data showed 92% of cotton crops were planted in the US by the week ended June 12, up from 80% in the previous week. USDA June report draw a bearish trend (from 14 million to 13.5 million bales) for the US cotton exports while ending stocks at 9 year high at 5.5 million bales. Speculators reduced a bullish stance in cotton futures and options to the lowest since November 2016.
Cotton futures are expected to be under pressure on reports of good sowing progress and higher stock levels in the country. Normal monsoon forecast and higher prevailing price of cotton may encourage farmers to plant more cotton as prices of oilseeds and pulses are at multi year lows.
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