Cotton prices dropped on improved supply prospects.

Cotton candy prices experienced a decline of -0.73% to settle at 59,540, driven by improved supply prospects as the new crop season begins. This will lead to increased arrivals, putting pressure on prices. India’s exports faced challenges in 2022-23, dropping to a record low of 15.50 lakh bales. However, the downside is expected to be limited due to a weaker production outlook, with an 8%-10% decrease compared to the previous year.

The prolonged dry spell and pink bollworm damage in North India could affect cotton yields and quality for the 2023-24 crop. Globally, the cotton industry is grappling with reduced production and consumption. U.S. cotton projections for 2023/24 indicate lower production, exports, and ending stocks. India is expected to produce 330-340 lakh bales of cotton in the 2023-24 season. Cotton picking in northern states is gaining momentum. Market prices in Rajkot, a major spot market, ended at 28,184.25 Rupees, down by -0.84%.

From a technical perspective, the market is undergoing long liquidation, with a decrease in open interest by -1.83%. Prices dropped by -440 rupees. Support for Cotton candy is at 59,380, with a potential test of 59,210 below that. Resistance is likely at 59,760, with prices possibly testing 59,970 if they move above.