In a recent trading session, cotton prices experienced a slight increase of 0.52 per cent, closing at 57580, boosted by robust demand for Indian cotton from countries such as Vietnam and Bangladesh. The USDA’s weekly export sales report shared a major uptick in net sales, signaling good demand for the 2023/2024 season. Nevertheless, these gains were reduced by the prospect of better crops in countries like Australia, which narrowed the upward potential.
Looking forward, the International Cotton Advisory Committee (ICAC) estimates growth in cotton-producing regions, manufacturing, consumption, and trade for the upcoming 2024-25 season. In India, it is projected that cotton stocks will fall by almost 31 per cent in 2023/24, dipping to their lowest level in over three decades due to reduced production and growing consumption. This reduction in stockpiles is projected to restrict exports from India, increasing global prices while undoubtedly impacting the profit margins of local textile companies.
For the marketing year 2024/25, India’s cotton production is projected to somewhat decrease to 25.4 million 480 lb. bales, mainly due to farmers shifting acreage to crops with higher returns. Still, mill consumption is estimated to rise, projecting a rise in demand for yarn and textiles in key international markets. Moreover, China’s cotton imports are expected to grow to 2.4 million metric tons (MMT) in 2024/25, driven by increased domestic and international demand for textile and apparel products.
Precisely, the cotton market witnessed short covering, ending in a decrease in open interest by -0.26 per cent and a price increase of 300 rupees. Presently, support for Cottoncandy is recognized at 57200, with a likely test of 56830 levels if this support is breached. On the upside, resistance is likely at 57800, with the likelihood of prices testing 58030 upon surpassing this level.