January 31, 2024 Cotton faced a decline of -0.42%, settling at 57380, influenced by changes in global consumption and production forecasts. World consumption for the 2023/24 season is projected to be 1.3 million bales lower than the previous month's estimates, with reductions for countries including India, Indonesia, Pakistan, Uzbekistan, and Turkey. However, ending stocks are forecast to be 2.0 million bales higher, driven by increased beginning stocks and production along with lower consumption. The Cotton Association of India (CAI) maintained its estimate for domestic consumption at 311 lakh bales for the 2023-24 season, while beginning stocks increased due to lower consumption in Uzbekistan. Brazil achieved a historic high in cotton production for the 2022-23 season, attributed to expanded cultivation and productivity.
Despite the rise in global supply, sluggish demand, influenced by challenging economic conditions, resulted in bloated inventories and reduced cotton prices worldwide. Reports indicate a decline in pink bollworm infestation in the cotton crop in India. The infestation has dropped from 30.62% during 2017-18 to 10.80% in 2022-23. This reduction is a positive development for cotton growers in various regions. The International Cotton Advisory Committee (ICAC) projected that global cotton production is expected to outpace consumption for the second consecutive year. Global cotton lint production is forecasted to grow by 3.25% year-on-year to 25.4 million metric tons in the 2023-2024 season, while consumption is expected to marginally decline to 23.4 million metric tons. In the Rajkot spot market, the cotton price ended at 26518.6 Rupees, reflecting a drop of -0.55%.
Technically, the cotton market is undergoing fresh selling, with a 2.54% gain in open interest, settling at 283. Prices have decreased by -240 rupees. Cotton finds support at 57260, with the potential for a test of 57150 levels on the downside. On the upside, resistance is expected at 57540, and a breakthrough could lead to a test of 57710 levels.
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