Cotton prices to trade sideways to higher: Angel Commodities
Angel Commodities’ report on Cotton
MCX Cotton Nov futures closed lower on Monday on long liquidation due to mixed fundamentals of higher arrivals and reports of damage to cotton crops in Maharashtra. Moreover, start of procurement by CCI in Gujarat at higher prices and govt. imposing 5% GST under reverse charge mechanism (RCM). The notification says that the GST on supply of raw cotton by farmers will be liable to be paid by the buyers – traders & ginners under the RCM, which makes cotton procurement expensive for them. The CAI has estimated cotton crop for the 2017 – 18 season at 375.00 lakh bales of 170 kgs each which is higher by 37.75 lakh bales compared to the previous year’s crop of 337.25 lakh bales.
Cotton futures are expected trade sideways to higher on good physical demand from the mills and traders. Procurement by CCI whose target to procure about 100 lakh bales this season is also driving the prices higher. Reports of pest damage in states of Maharashtra and Gujarat may keep prices higher.
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