MCX Cotton Candy prices declined by about 2.05% in one week, indicating sluggish demand amid fears of recession. The cotton market is currently experiencing mixed dynamics across various regions in India. Pressure is also being seen as cotton sowing is progressing well with an expected increase in sowing area in North India, while the cotton yarn market in South India, on the other hand, is facing weak demand from the weaving industry, leading to Cotton yarn prices have come down.
On the supply side, the Cotton Association of India (CAI) has lowered its cotton crop forecast for 2022-23 season, citing decline in production in Maharashtra, Telangana, Tamil Nadu (NS:TNNP) and Odisha. This shortfall in local production is expected to reduce cotton stocks to their lowest level in more than three decades. In terms of the global outlook, supplies for 2023/24 are forecast to be higher than last year, despite a slight reduction in production. Consumption is expected to rebound, and ending stocks are expected to decline slightly. However, lower harvesting areas are expected in China, India, Turkey and Australia, partially offset by increases in franc zones in the United States and West Africa.
Lastly, the cotton market is currently facing sluggish demand domestically, while supplies are expected to be high with recovery in consumption globally. A decline in local production and dwindling stocks of cotton in some regions of India indicate a tightening supply position. The future direction of the market will depend on factors such as improving demand, global production trends and economic conditions. From a technical perspective, cotton prices is consolidating with support near 60800 levels and chances of testing 60280 levels. Resistance is expected near 61820 levels and on an upside the price can trade towards 62600 levels.
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