Yesterday, cotton candy prices settled with a marginal increase of 0.04% at 56100, driven by continued strong demand for Indian cotton from buyers in countries like Bangladesh and Vietnam. However, upside potential remained limited due to sluggish milling demand amid muted yarn demand in the global market. Prospects of a better crop in countries such as Australia also weighed on prices. The International Cotton Advisory Committee projected increases in the cotton-producing area, production, consumption, and trade for the next season, 2024-25. India's cotton stocks are expected to decline by nearly 31% in 2023/24, reaching their lowest level in over three decades, due to lower production and rising consumption.
For MY 2024/25, India's cotton production is estimated to decrease by two per cent to 25.4 million 480 lb. bales, with a shift in acreage to higher return crops. However, mill consumption is expected to increase by two per cent as yarn and textile demand improves in major international markets. Additionally, with the recent recension of import duties on extra-long staple (ELS) cotton, imports are forecasted to rise by 20 per cent. In China, cotton imports for MY 2024/25 are forecasted at 2.4 million metric tons, driven by higher domestic and international demand for textile and apparel products. Production is expected to remain stable in Xinjiang but decline in other regions.
From a technical perspective, the market is experiencing short covering, with a 1.4% drop in open interest while prices increased by 20 rupees. Currently, cotton candy has support at 55900, with potential testing at 55700 if it falls below this level. Resistance is expected at 56300, with a move above possibly pushing prices to 56500.
