Cotton candy prices rebound after initial dip.

Cotton candy prices rose slightly by 0.13 per cent to Rs 61,660 after a brief drop. This rebound is likely due to short covering, a market manoeuvre after a price decline.

The initial dip resulted from projections by the International Cotton Advisory Committee (ICAC) for a global increase in cotton production area, output, consumption, and trade in the upcoming season (2024-25).

However, upward revisions in production estimates for the current season by organizations like CAI and CCPC, along with resilience in India's output, countered the downward pressure.

Looking ahead, a slight decrease in India's production is expected for the next season as farmers seek crops with higher returns. Conversely, mill consumption is anticipated to rise due to stronger global yarn and textile demand. Additionally, the recent import duty cut on extra-long staple cotton is expected to boost imports and influence market dynamics.

Technically, the market is experiencing short covering, with prices rising alongside a decrease in open interest. Analysts identify support at Rs 61,500 and resistance at Rs 61,800.

A breakout above resistance could indicate further price gains, while a drop below support might lead to a test of lower levels around Rs 61,350. These indicators suggest a cautious yet potentially bullish outlook for cotton candy prices, contingent on market sentiment and supply-demand dynamics.