Cotton futures were trading lower at Rs 21,880 per bale on March 18 as participants reduced their positions as seen from open interest. Prices had fallen 0.7 percent on March 17 to settle at Rs 22,020/bale on the MCX.
The agri commodity extended decline after a gap-up start in the afternoon session, tracking negative global cues.
The soft commodity has been trading higher than 50, 100 and 200 days' moving averages but lower than 20 and 5 days’ moving average on the daily chart. The Relative Strength Index (RSI) is at 50.33 which indicates neutral momentum in prices.
“Some profit booking has triggered in Cotton after multiple months of one side rally, Cotton Corporation of India halting its procurement operations and weaker-than-expected data published by USDA in March month WASDE report”, said Mohit Vyas, Analyst at Kotak Securities.
The Cotton Association of India has marginally lowered its production estimate to 35.9 million bales for the year from 36 million bales in 2019-20. Of the total crop, around 29.9 million bales have arrived in markets across India till February.
MCX March Cotton trade at a discount of 12 percent against Cotlook A price of 92.50 cents as on Tuesday.
The area under Kharif crops in 2020-21 (July-June) was at 111.7 million hectares, up nearly 5 percent from a year ago, farm ministry data showed.
In the futures market, cotton for March delivery touched an intraday high of Rs 22,080 and an intraday low of Rs 21,820 per bale on the MCX. So far in the current series, the commodity has touched a low of Rs 21,170 and a high of Rs 22,540.
Cotton futures for March delivery slipped by Rs 140, or 0.64 percent, to Rs 21,880 per bale at 14:58 hours IST on a business turnover of 5,660 lots. The same for April contract dropped by Rs 120, or 0.54 percent to Rs 22,240 per bale with a business volume of 5,536 lots.
The value of March and April’s contracts traded so far is Rs 35.03 crore and Rs 22.78 crore, respectively.
Geojit Financial Services said if prices hold the support of Rs 21,880, we could see a pullback towards Rs 22,300 - Rs 22,400 levels.
At 09:30 (GMT), US Cotton futures were down 0.27 percent and was quoting at 86.28 cents/pound on Intercontinental Exchange (ICE).
For all commodities-related news, click here
Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.