Cotton Dropped As World Consumption In 2023/24 Is Forecast 1.3 Million Bales Lower

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February 10, 2024 Cotton candy, a crucial commodity in the global textile industry, experienced a marginal decline of -0.03% in its price, settling at 57720. This decline comes amid notable shifts in the

global cotton market, with projections indicating reduced world consumption for the 2023/24 period, particularly in key cotton-producing nations such as India, Indonesia, Pakistan, Uzbekistan, and Turkey. Additionally, higher world-ending stocks for 2023/24, driven by increased beginning stocks and production alongside lower consumption, exerted downward pressure on prices. CAI maintained its estimates for domestic consumption and production for the 2023-24 season, indicating stability in India's cotton sector.

Despite this, global dynamics, including Brazil's historic high cotton production in the 2022-23 season and reports of pink bollworm infestation impacting cotton crops, contribute to the complex market landscape. Brazilian cotton shipments experienced fluctuations, reflecting broader challenges in global demand amid unfavourable economic conditions. Furthermore, projections from the ICAC suggest that global cotton production is set to outpace consumption for the second consecutive year. While production is expected to increase by 3.25% year-on-year, consumption is forecasted to marginally decline, indicating potential oversupply in the market. In the major spot market of Rajkot, the price of cotton candy ended at 26745.6 Rupees, dropping marginally by -0.1%. This slight decline may reflect localized factors or minor fluctuations in demand-supply dynamics within the region.

From a technical standpoint, the market is witnessing fresh selling pressure, indicated by a gain in open interest by 3.8% despite the price decrease of -20 rupees. Support levels for cotton candy are identified at 57460, with a potential downside target of 57200. Conversely, resistance is expected at 57940, with a breakout potentially leading to prices testing 58160 levels.

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