Cotton prices dip amid weak demand, USDA cuts India production forecast

Cotton candy prices dipped 0.61 per cent to 56,920, pressured by weak yarn demand and payment issues. The USDA lowered India's cotton production forecast for 2024-25 to 30.72 million bales, citing crop damage from excessive rain and pests. Global production estimates increased slightly due to higher yields in China, Brazil, and Argentina.

India's production is projected to decline 7.4 per cent year-on-year, with acreage down 9 per cent. Farmers in key regions like Gujarat are shifting to more profitable crops like groundnuts. Indian demand is expected to remain steady, while exports are forecast to fall to 1.8 million bales. Production shortfall could lead to higher imports estimated at 2.5 million bales.

Globally, US production is seen falling due to Hurricane Helene, and global trade is projected to decline by 500,000 bales, mainly due to lower Chinese imports. Technically, the market is under selling pressure, with open interest rising. Support levels are at 56,880 and 56,840, while resistance is at 56,980 and 57,040.