Cotton price touches new high of Rs 19,040 for October futures, further upside likely

Cotton futures briefly jumped to over Rs 19,000 per bale on October 13 as participants widened their positions, as seen from the open interest. Cotton had gained for the fourth successive day on Monday and rose 2 percent on the MCX Index to settle at Rs 18,940 per bale (170 kg).

Sunand Subramaniam of Choice Broking said, “Fundamentally for the month ahead, we expect MCX Cotton futures to continue to trade bullish owing to forecast of lower production of cotton in India in the major states of Maharashtra and Madhya Pradesh by 15-20 percent.”

He said that exports had shown recovery in the global market in the past weeks, as the Cotton Corporation of India (CCI) focuses on boosting exports from India, which could limit any major downside movement.

The Cotton Association of India had earlier increased the production estimate for 2019-20, the prior growing season, to 360 lakh bales, citing higher output from Gujarat, Maharashtra and Madhya Pradesh.

In the futures market, cotton for October delivery touched an intraday high of Rs 19,040 and an intraday low of Rs 18,850 per bale on the MCX. So far in the current series, the commodity has touched a low of Rs 16,060 and a high of Rs 19,040.

Cotton futures for October delivery gained Rs 80, or 0.42 percent, to Rs 19,020 per bale at 4:40 pm on a business turnover of 606 lots. The same for November contract jumped Rs 50, or 0.26 percent at Rs 19,200 per bale with a business volume of 545 lots.

The value of October and November’s contracts traded so far is Rs 7.44 crore and Rs 6.84 crore respectively.

Subramaniam expects a bullish trend for the month and recommends buying in MCX Cotton October futures for a target of Rs 20,200 per bale with a stop loss placed below at Rs 18,180 per bale on a closing basis.