Cotton prices saw a marginal decline of -0.18 percent, settling at INR56060, influenced by Brazil’s record-high cotton production in the 2022-23 season.
Expanding cultivation and enhanced productivity contributed to the global cotton supply surge. However, this surge in supply was met with sluggish demand, primarily attributed to unfavorable economic conditions, resulting in elevated inventories and a subsequent reduction in cotton prices worldwide.
The Cotton Association of India (CAI) maintained its estimate for the 2023-24 season at 294.10 lakh bales of 170 kg each. Despite concerns about global oversupply, CAI retained its pressing figures based on inputs from cotton-growing state associations and trade sources.
With the decline in pink bollworm infestation in the cotton crop, the damage estimates have reduced from 30.62 percent in 2017-18 to 10.80 percent in 2022-23. The International Cotton Advisory Committee (ICAC) projected that global cotton production is set to surpass consumption for the second consecutive year. The expected growth in global cotton lint production in the 2023-2024 season is 25.4 million metric tons, while consumption is forecasted to decline marginally to 23.4 million metric tons.
Technically, the market is undergoing long liquidation, with a -1.44 percent drop in open interest, settling at 206. Cotton candy finds support at 56000; a breach below may test 55950 levels. Resistance is anticipated at 56100; a move above could lead to prices testing 56150. The market dynamics highlight the delicate balance between global supply and demand, with various factors influencing cotton prices in the current economic landscape.
