Kedia Advisory - Cottoncandy prices slipped by 0.88% to settle at ₹54,190 amid profit booking, following earlier gains fueled by shrinking domestic crop estimates. The Cotton Association of India (CAI) revised its 2024-25 crop production forecast down by 4 lakh bales to 291.30 lakh bales (170 kg each), primarily due to lower yields in Maharashtra. The overall cotton supply till March-end, including imports and opening stocks, is estimated at 306.83 lakh bales. Notably, imports have already reached 25 lakh bales, and closing stocks for the season are projected to decline to 23.49 lakh bales—significantly lower than the previous year’s 30.19 lakh bales.
India’s cotton imports are projected to more than double to 33 lakh bales for the 2024-25 season, reflecting concerns over declining domestic production, while consumption is expected to remain flat. Exports, however, are set to decline sharply to 16 lakh bales from 28.36 lakh bales a year earlier, reflecting subdued global demand. Meanwhile, mills are well-stocked and showing limited buying interest, which could restrict any significant upside in prices in the near term. On the global front, the U.S. cotton balance sheet reflected a 100,000-bale cut in exports and a corresponding rise in ending stocks. World cotton production saw a modest reduction, and global textile mill use fell by 520,000 bales due to weaker demand in China and Indonesia.
Technically, the market is under long liquidation, with open interest declining by 0.8% to 249. Cottoncandy finds support at ₹52,940, with a further downside possible to ₹51,700. Resistance is seen at ₹55,010, and a move above this level could push prices toward ₹55,840.
