Angel Commodities’ report on Cotton
MCX Cotton fall 0.50% on Tuesday pressurized by good sowing progress in India. USDA’s Foreign Agricultural Services has raised its forecast for India’s cotton production in 2017 – 18 (Aug – Jul) to 372 lakh bales (1 bale = 170 kg) from 359 lakh bales estimated in June. With the timely onset of the monsoon and prospects for normal rainfall, yields are expected to be higher in most of the cotton growing states. As per latest data from Agricultural Ministry, cotton is planted in 46.10 lakh hectares (l ha) till last week, higher by 12 % compared to last year acreage of 30.6 lakh ha for same period. We have seen jump in cotton prices last week as CAI has reduced cotton production in 2016/17 to 336 lakh bales from 340.5 lakh bales estimated in April. US markets were closed on Tuesday. ICE cotton futures fell on Monday on beneficial weather in large growing regions and as speculators liquidated their net long positions to lowest in more than a year. The USDA’s annual acreage report estimated all cotton planted acres at 12.055 million, which was below analysts’ estimate of 12.278 million acres and the USDA March forecast of 12.233 million. As per CFTC, Speculators again cut a bullish bet in cotton by 14,048 contracts to 31,134, in the week to June 27.
Cotton futures are expected trade sideways to lower on reports good sowing progress but lower production data for last year give some support to cotton prices. Higher prevailing price of cotton may encourage farmers to plant more cotton. Higher stock levels in the country due to higher imports and lower exports may pressurize prices further.
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