As traders struggled with worries about short-term supply shortages, cotton prices, depicted as Cotton Candy, finished up 0.25% at 57000. The certified cotton stocks, deliverable against the contract, have decreased from their previous peak on December 1st to 6,325 bales on December 5th, indicating a tightening supply scenario.
The International Cotton Advisory Committee (ICAC) predicts that global cotton production may surpass consumption for the second year in a row, which has raised concerns worldwide even if Brazilian cotton shipments surged in November. A considerable rainfall shortfall in north Maharashtra and damage from pink bollworm infection in Haryana are the reasons given by the Cotton Association of India (CAI) for reducing its estimate of cotton production for the current season to 29.4 million bales.
In November, the USDA released a report that increased world ending stocks by 1.6 million bales. Cotton futures saw downward pressure due to weak global cotton bookings and a 5-week low in export sales during the final week of November, both on the demand side. With increased output and ending stockpiles and marginally decreased consumption, the global cotton balance sheet for the 2023–2024 season reflects market uncertainty.
With open interest declining by 1.18% to end at 167, the market is currently exhibiting short covering in the technical domain. Cotton candy prices have risen by 140 rupees. A breach below 56580 might take the stock as high as 56170. A breakthrough that could lead to a test of 57650 is anticipated, with resistance at 57320.
