Cotton futures plunged to Rs 20,450 per bale on March 25 as participants increased their short positions as seen from open interest. The agri commodity extended decline in the evening session, tracking weak global cues, stronger dollar and selloff in crude oil.
The soft commodity has been trading lower than 5, 20, 50 and 100 days’ moving averages but higher than the 200-day moving average on the daily chart. The Relative Strength Index (RSI) is at 25.59, which indicates bearish momentum in prices.
“ICE Cotton futures have declined in eight out of last nine sessions, which has dragged domestic cotton by around Rs 1,400 in last six straight sessions. Besides, rising cases of COVID in the home country as well as across the globe and market news of Cotton Corporation of India lowering its selling prices have added a negative sentiment in natural fibre”, said Mohit Vyas, analyst at Kotak Securities.
Rains in largest cotton-growing state in the US, weak March WASDE report, appreciating dollar are likely to weigh on cotton prices in the coming sessions.
MCX April Cotton trade at a discount of 12 percent from Cotlook A price of 90.50 cents as on Monday.
In the futures market, cotton for March delivery touched an intraday high of Rs 20,830 and an intraday low of Rs 20,320 per bale on the MCX. So far in the current series, the commodity has touched a low of Rs 20,320 and a high of Rs 22,540.
Cotton futures for March delivery fell Rs 350, or 1.68 percent, to Rs 20,450 per bale at 19:58 hours IST on a business turnover of 2,136 lots. The same for April contract tumbled Rs 360, or 1.71 percent at Rs 20,730 per bale with a business volume of 8,332 lots.
The value of March and April’s contracts traded so far is Rs 75.90 crore and Rs 142.78 crore, respectively.
At 14:31 (GMT), US Cotton futures crashed 4.40 percent to quote at 78.81 cents/pound on Intercontinental Exchange (ICE).
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