November 28, 2023 Cotton candy prices experienced a decline of -0.66%, settling at 57100, primarily driven by lingering demand concerns. The Cotton Association of India (CAI) forecasts a 7.5% reduction in India's cotton production for the 2023/24 season, reaching 29.5 million bales due to lower planted areas and productivity challenges from El Nino weather conditions. Import projections for the current marketing year suggest an increase to 2.2 million bales, up from the previous year's 1.25 million bales, indicating potential supply constraints.
On the global front, the U.S. cotton balance sheet for 2023/24 shows a slight reduction in consumption but higher production and ending stocks. Despite a 273,000 bales increase in production, concerns about lower consumption and higher ending stocks, accounting for 22.5% of use, impact the market sentiment. In India, the CAI's final estimate for the 2022-23 cotton crop production is slightly higher at 31.8 million bales, contrasting with the government's estimate of 34.3 million bales and the industry's estimate of 29.9 million bales for the same season. However, cotton production in north Maharashtra is expected to decline by 25% due to insufficient rainfall, with estimates suggesting a reduction to 15 lakh tonnes from the normal annual production of 20 lakh tonnes. In the major spot market of Rajkot, prices ended at 26967.75 Rupees, reflecting a decline of -0.23%.
Technically, the market is under fresh selling pressure, with a 4.1% gain in open interest to settle at 127. With prices down by -380 rupees, support is identified at 57100, and a breach below could test 57090. On the upside, resistance is expected at 57120, and a breakthrough could lead to prices testing 57130.
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