Cotton, Kapas and Cotton oil cake prices are running firm at
the national bourses today. The general direction had been downwards since past
5 to 7 weeks roughly although the broader term fundamental remains bullish.
Fear of drop in export demand from China due to ongoing financial turmoil and
quality related issues in the state of Gujarat seem to be the key driver in
keeping prices lower. Soft tone in edible oil seed has affected sentiments in
cotton. (Cotton is a non edible oil seed) Weakness in US cotton markets had
also weighed over domestic prices of late. The direction has reversed yesterday
and remains in support of the bulls currently.
According to analysts, tendency of MCX Feb cotton and NCDEX
Apr Kapas to hold over respective support of 15850 and 770 seems to favor a
bullish price action. For the day tendency of prices to remain firm has been
predicted by most analysts. As per a recently released USDA attached, cotton
arrivals in India at the slowest rate in last 3 years. This is because of growers
holding cotton for higher prices consistent downgrading of production forecast
of the crop. The CCI, as of January 27, 2016, reported nationwide MY 2015/16
arrivals at 11.24 million 480 lb. bales (14.4 million 170 kg bales/2.4 mmt).
The daily arrivals were estimated at 121,415 480 lb. bales (155,500 170 kg
bales/26,435 mt). This is the slowest that arrivals have been in the past three
years as per the US Agriculture Department. At present, arrivals are lagging by
almost 30 percent compared to the previous year and sources indicated that
farmers are holding cotton in anticipation of higher prices. Also, the lag in
arrivals is attributable to late sowing, inadequate rains, and high levels of
pest incidence during growth stages which subsequently affected boll maturation.
