Cotton prices settled down by -0.16% at ₹54,670, driven by rising global cotton production projections and concerns over lower Indian output. Global cotton production for the cotton year (CY) 2024-25 is projected to increase by over 1.2 million bales to reach 117.4 million bales, primarily supported by higher production in India and Argentina. Meanwhile, India's cotton production for the upcoming season is expected to fall by 7.4% to 30.2 million bales due to reduced planted area and damage caused by excessive rainfall. This decline in production has led to reduced exports, with India projected to import 2.5 million bales in the new year, up from 1.75 million bales a year ago. The Cotton Association of India (CAI) reported a sharp reduction in India's cotton area to 11.29 million hectares from 12.69 million hectares in the previous year, with farmers shifting focus to crops like groundnuts offering better returns.
In addition to the concerns in India, U.S. cotton production estimates for 2024/25 have been revised upward to nearly 14.3 million bales, contributing to higher global supplies. The world cotton balance sheet for 2024/25 reflects increased production, consumption, and ending stocks. However, world trade saw marginal increases with higher exports from Brazil, Benin, and Cameroon, offsetting reductions from Burkina Faso and Mali. Despite a slight increase in global supply, India's declining production will likely tighten local markets, reducing exports while increasing imports to meet domestic demand.
Technically, the market is witnessing fresh selling as open interest has risen by 3.01% with prices down by -90 rupees. Cottoncandy is currently supported at ₹54,550, with a potential test of ₹54,440. Resistance is seen at ₹54,820, with a move above expected to test ₹54,980.
