Cotton prices drop as WASDE report predicts higher production, increased imports

Cotton prices have declined by 0.45 per cent, closing at Rs 53,670, following a bearish outlook from the WASDE report, which projected higher production and ending stocks for the 2024-25 crop year. Global cotton production is expected to rise by 1.2 million bales, reaching 117.4 million, with India and Argentina seeing larger harvests.

However, a sharp 43 per cent drop in kapas arrivals in North Indian states until November 30 is creating raw material shortages, impacting ginners and spinners. The Cotton Association of India (CAI) has projected cotton consumption for 2024-25 at 313 lakh bales, with pressing estimates holding steady at 302.25 lakh bales. Cotton imports are expected to increase significantly by 9.8 lakh bales, reaching 25 lakh bales, with 9 lakh bales already arriving at Indian ports by November 30. The closing stocks for the crop year are estimated at 26.44 lakh bales, lower than the previous year's 30.19 lakh bales.

On the global front, US cotton production has risen to 14.3 million bales, while world consumption has increased by 570,000 bales, driven by India, Pakistan, and Vietnam. Technically, the market is facing long liquidation, with support at Rs 53,490 and resistance at Rs 53,940.