Kedia Advisory - Cottoncandy prices rose modestly by 0.43% to settle at ₹54,150, supported by supply-side concerns as the Cotton Association of India (CAI) further lowered its production forecast for the 2024-25 season. The latest CAI revision pegs domestic output at 291.30 lakh bales of 170 kg each, down from the earlier estimate of 295.30 lakh bales, primarily due to reduced output in Maharashtra. The total cotton supply by the end of March, including imports and opening stocks, is estimated at 306.83 lakh bales. Notably, cotton imports are expected to more than double to 33 lakh bales this season from 15.20 lakh bales last year, as domestic production continues to shrink.
Despite the projected increase in imports and reduced exports (down to 16 lakh bales from 28.36 lakh bales last year), mill demand remains subdued. Mills are reportedly well-stocked, leading to limited immediate buying, capping upside momentum in prices. Ending stocks for the season are expected to fall to 23.49 lakh bales, down from 30.19 lakh bales in the prior year, indicating tighter year-end availability. Globally, the U.S. balance sheet for 2024/25 saw a 100,000-bale cut in exports and a corresponding rise in ending stocks. The world balance sheet reflects reductions in production and consumption, especially in China and Indonesia, with global mill use down by 520,000 bales.
Technically, the market is witnessing short covering, with open interest declining by 0.81% to 246. Support lies at ₹54,120, with further downside risk to ₹54,100. Resistance is seen at ₹54,160, and a breakout above this could push prices toward ₹54,180.
