Slumping demand dampens cotton prices despite record production

Global cotton prices fell (-0.42 per cent) to 57,380, weighed down by revised forecasts for lower consumption and higher ending stocks. World consumption estimates for the 2023/24 season dropped by 1.3 million bales compared to last month, impacting India, Indonesia, Pakistan, and others. However, increased production and lower consumption pushed ending stocks up by 2.0 million bales.

Slowing demand, driven by economic woes, led to bloated inventories and price declines despite record production. Brazil hit a historic high in 2022-23 due to expanded cultivation and productivity.

Positive news emerged from India, where pink bollworm infestation in cotton crops has significantly decreased from 30.62 per cent in 2017-18 to 10.80 per cent in 2022-23.

Globally, the ICAC predicts a second year of cotton production exceeding consumption. Production is expected to rise by 3.25per cent to 25.4 million metric tons, while consumption dips slightly to 23.4 million metric tons.

In India's Rajkot spot market, cotton prices also fell (-0.55per cent) to 26,518.6 Rupees. Technical analysis suggests further selling pressure in the cotton market, with prices potentially testing 57,150 levels. Resistance is seen at 57,540, with a potential for a bounce to 57,710 beyond that.