Friday, 27 March 2015 18:28

Cotton

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Pan Capital Services Ltd. Cotton Report
Strategy Till 15 October Major event Affecting Cotton
Commodity Trend Lower Side Upper Side Recommendation for Traders

> China mills import of cotton.

> China cotton policy of allowing import of only 1 ton to 4 ton of inventory buying+ lower price gap

 

Cotton Global-Stable 15000 17500 Cotton ICE has reached its lower levels close to 62.22 cents. Please wait for further positions.

Risk to View: INR depreciation:
> Weak Indian and chinese Monsoon: Monsoon is good.
> US crop damaged by weather.: Moisture level was high last month In US.



 
 
          Major Events Affecting Cotton Market
 Strategy Till  30/10/2014
Commodity  Trend Lower Side Upper Side  Recommendation For Traders
Cotton

Down
17000-19000

16500 20000  To sell on all high ticks, All crops in US China India are doing good and expected to increase production.

> INR depreciation will be capped near 60.50-61.50 range.
> Rain is expected to improve which may push already high price down.
> China demand will decrease while Vietnam, Indonesia and Bangladesh will increase consumption.

> Risk to view: Heavy INR depreciation. Rain Deficiency in US and Austrailia.

14 October 2014: CCI has said that Indian cotton production will be more than estimated 39 million bales it is expected tor reach 40 million bales. This may not support higher cotton prices.

10 October 2014: No game changing data is announced on cotton last week. We may still see ICE range movements. Expected to have increase in volume post November.

01 October 2014: Pakistan flood affected areas will reduce cotton ouput which in turn increase import to Pakistan for cotton. This is expected to be at 2 million bales (1 bales is equal to 170 kg). China not going to import cotton to the extent they imported last year. Overall outlook remains same, cotton is still bearish.

29 Sep 2014: Cotton slightly up from yday low. Farmers are refraining from selling cotton in market. Cotton prices is at critical point. In spot US it has gone close to 52 where Govt support triggers. China is expected to import 1.3 million matric tonnes of cotton which is half quantity last year.

23 Sep 2014: Cotton slumped to 62.22 dec delivary ICE contract which led to MCX cotton drop to 16000 levels. It is in line with expectations. Markets fall after news coming that chinese mills will not but cotton to previous year level.

17 Sep 2014 - 22 Sep 2014: China Cotton Policy: China cotton policy is changed. They used to support cotton prices overall if they used to go below certain level. As per new policy they will let market decide cotton prices. If cotton prices below set level then they will directly fund cotton producers. This will bring prices lower. ICE cotton is trading at 64.03 22 sep 8:52 IST.

16/09/2014: China cotton imports in August fell 26% Y/y to 204,500 tons, according to Cncotton.com, a website operated by China National Cotton Information Center, citing data from the nation customs bureau.

15/09/2014: More than 25% of global agricultural production is in areas of high water stress, according to the World Resources Institute. The figure rises to 56% for irrigated cropland, which produces 40% of the global food supply. More than half of cotton production -- one of the most water-intensive crops -- happens in regions of high or extremely high stress. Increasing water stress in agriculture is fueling demand for seed varieties that reduce the need for water.

 

12/09/2014: Cotton rises as USDA forecast lower inventory and production. US stock piles expected to be at 5.2 million bales lower than prior estimate of 5.6 million bales. ICE cotton for december delivery rises to 68.01 cent approximately 1% rise.

 

11/09/2014: We can see that CAI and ICAC has different view on Indian output, ICAC says it will be around 6.3 million tons and CAI belives output will be at 6.86 million tons. If CAI is true than India will be largest producer of cotton. This leaves world with more inventory to trade cotton negatively.

 

10/09/2014: Cotton association of India has estimated cotton supply of 468.50 lac bales while domestic consumption is estimated to be 300 lac bales. India will have 168.50 lac bales for export.

 

09/09/2014: Output in Pakistan may rise to 10 million bales (Bales weight 480 lbs or 218 kg), In India cotton exports is likely to fall on sluggish demand from China. It is expected to export 7.69 million bales.

 

08/09/2014: Australia cotton production may be down to 580,000 matric tons from 890,000 a year earlier as water supply decreases in said area.

 

05/09/2014: No specific news on Cotton. ICE is trading slightly below yesterday around 65 cents.

 

04/09/2014: China, to encourage domestic cotton will stop selling inventories once fresh cotton is in Market.

> Global inventories expected to rise to 22.25mt increase of 0.62mt more than forecast.

 

03/09/2014: Production will fall to 29.5m bales in 12 mos. that started Aug. 1 from 30.5m a year earlier, USDA Foreign Agricultural Service says in report posted today on website.

 Exports will drop to 6m bales from 9.2m
 NOTE: Bale weighs 480 lbs, or 218 kgs

 02/09/2014: > Brazil's area planted with cotton should increase by 8 percent this season from a year earlier as prices for the fiber remain more favorable.

 > Area under cotton has risen to a record 12.25 million hectares, an increase of 12 per cent over last year 11.16 million ha and is poised to touch 12.5 million ha with plantings still on in coastal Andhra Pradesh and Tamil Nadu.

 01/09/2014: >Plentiful supply from the new crop should limit prices of the December contract to under 70 cents a lb. Supply concerns eased further after rain was received in the dry West Texas and Georgia cotton growing regions on Thursday, Accuweather.com data showed.

28/08/2014: Low pressure areas in Gulf of Maxico is expected to bring rain in taxas area where balls have already set it. If rain is higher than normal then it will drive production lower and increase prices.

27/08/14 Comments: China advises to store new cotton arrivals for Chinese cotton farmers.

 

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