Cottoncandy drops 0.88% to Rs 54,190 as profit booking kicks in amid low crop forecast

Cottoncandy futures declined 0.88 per cent to settle at Rs 54,190, pressured by profit booking after recent gains driven by tightening domestic crop prospects. The Cotton Association of India (CAI) lowered its 2024-25 cotton production estimate by 4 lakh bales to 291.30 lakh bales (170 kg each), citing poor yields in Maharashtra. Total cotton supply till March-end, including imports and opening stock, is pegged at 306.83 lakh bales.

Cotton imports have already reached 25 lakh bales, with projections indicating a rise to 33 lakh bales more than double the previous season highlighting domestic supply concerns. However, consumption is expected to stay flat, and exports are likely to plunge to 16 lakh bales from 28.36 lakh bales last year due to sluggish global demand. Closing stocks are forecast to fall to 23.49 lakh bales, down from 30.19 lakh bales a year earlier.

With mills holding ample stocks, near-term buying interest remains muted, capping price gains. Internationally, the US cut its export forecast by 100,000 bales, raising its ending stocks, while global textile mill use dropped by 520,000 bales amid softer demand from China and Indonesia.

Technically, the market is undergoing long liquidation, with open interest down by 0.8 per cent to 249. Support lies at Rs 52,940, with resistance at Rs 55,010.