MCX Jun cotton edged little higher on Tuesday to close at 21,200 rupees per bale. Reports of normal monsoon and good sowing progress in Northern India keeping the prices in check. Recently, CAI has projected cotton exports at 46 lakh bales compared to 69 lakh bales last year due to higher prices and smaller crop size. With the lower exports and higher imports the closing stock as on September 30, 2019 may increase from 13 lakh bales as estimated by the CCI’s Cotton Crop Committee. In its latest monthly report in June, USDA kept the production, export and import unchanged. India will be back to number one position in 2019/20 season with projected production of 28.5 million bales. In the current season we see higher imports of about 31 lakh bales due to higher domestic prices. In April, cotton prices increased to highest levels in 2019 but now correcting as exports of cotton is down by 27% for first 3-months in 2019 compared to last year while imports up by 12%.
Outlook
Cotton futures may trade sideways due to expectation of steady to higher supplies in domestic market due to increase imports and decreased exports. Moreover, forecast of normal monsoon and steady demand my keep prices under pressure.
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