MCX Oct Cotton continue to trade lower on Monday to trade at 5 - weeks low on reports of improvement in acreage and lesser pest attacks in Maharashtra and good condition of cotton in main cotton growing states. Cotton acreage till last week was down by 1.9 % on year to 117.7 lakh hac compared to 119.9 lakh ha last year, according to the farm ministry data. Currently cotton futures are traded about 25% higher than last year prices. The USDA’s FAS has projected India''s cotton production to decline 1.7% on year to 365 lakh bales (1 ba le = 170 kg) due to delay in monsoon rains and fall in acreage. As per Commerce ministry data, cotton exports in June surged by 27.6% to 5.7 lakh bales as compared to last year. India is likely to export 70 lakh bales of cotton in 2018/19, down 30% from an earlier estimate due to low crops.
Outlook
Cotton futures are expected to trade sideways to lower due to improving acreage and weather conditions in top cotton growing states - Gujarat and Maharashtra. However, reports of pest attack may restrict production prospects may support prices in coming weeks.
Source: Mid day, India Tuesday, 04 September 2018