New Delhi, 16 May (Commoditiescontrol) Cotton futures fist-time breaches a psychological mark of Rs 50,000 per bale at local bourse on Monday amid short-covering and firm global cues. Shorter domestic supply of cotton also supported its prices, a trade analyst said.
At Multi Commodity Exchange, cotton futures contract expiring on May 31 was trading Rs 1310 or 2.69% higher at Rs 49950 per bale after hitting a record high of Rs 50050 per bale previous during the session with open interest of 2727 and volume 1263 lots.
MCX May cotton futures rallied nearly 13% in a month as the country is facing with supply crunch and domestic prices are ruling at premium as compared to global prices.
ICE cotton futures also rallied over 2% today and prices are ruling over 11-year.
However, prices of cotton also rallied in the physical markets tracking firmer cues from local and global futures but spot prices didn’t surge as much as witnessed in the futures.
A-grade cotton in the benchmark markets of Gujarat were offered at Rs 1,00,000-1,01,600 per candy and upper level in Rs/bale will be around Rs 48,516 per bale.
The spot rates of 29 mm cotton in the benchmark Kadi market of Gujarat were Rs 48,762.65 per bale, available at NCDEX website today.
The market analysts have to say that futures rallied sharply due to short-covering.
Anuj Gupta, VP, IIFL said, “Cotton futures rose sharply amid short-covering and low domestic supply.”
Cotton Association of India (CAI) has further reduced its cotton crop estimate for the 2021-22 season by 11.50 lakh bales to 323.63 lakh bales of 170 kgs each from its previous estimate of 335.13 lakh bales of 170 kgs. each.
Ajay Kedia, Director Kedia Advisory, said that reopening of Chinese market is also one the reason for firmer trend in cotton prices globally as China is one of the major buyers of cotton and yarn.
Shanghai will gradually begin reopening businesses such as shopping malls and hair salons from Monday after weeks in strict COVID lockdown, while Beijing battles a small but stubborn outbreak, he added.
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