Cotton drops on higher production estimates by CAI

Cotton candy prices fell by 0.42 per cent, settling at Rs 62,220. This decline is linked to recent upward revisions in cotton production estimates by Indian organizations like Cotton Association of India (CAI) and Cotton Corporation of India (CCI). CAI expects production to reach 309.70 lakh bales this season, while CCI has already procured 32.81 lakh bales.

Adding to the downward pressure, the textile industry is urging calm to avoid panic buying. Higher production estimates from India and Australia, coupled with global supply projections, are tempering cotton candy prices. However, lower ending stockpiles are expected despite increased production, potentially tightening supply in the future.

Technically, the market saw increased selling activity with open interest rising 1.62 per cent. Prices dropped Rs 260 and currently find support at Rs 62,100. Resistance is anticipated at Rs 62,360, with a potential break leading to testing of Rs 62,510 levels.

In conclusion, cotton candy prices are reacting to a combination of factors. While production increases are pushing prices down, concerns about tight future supplies could offer some near-term support. Market participants remain cautious, monitoring global production and consumption trends.