May Cotton Closed Lower Last Week

MCX May Cotton closed lower last week on balanced demand – supply situation. Cotton prices are still trading at higher levels for the season tracking firm trend in International markets, higher exports and expectation of lower acreage in the country in next season. As per ICAC latest press release, India acreage is expected to decrease to 11.9 million hectares in 2018/19. Cotton exports from the country are still behind the last year exports volume. As per the data released by Government, country exported 34.1 lakh bales of cotton, down 6.3% during Oct-Feb period compared to 36.4 lakh bales last year same period. India's 2017-18 (Oct-Sep) output has been revised downward by 500,000 bales to 360 lakh bales (1 bale = 170 kg) by recent cotlook report.

ICE cotton rose nearly 3% to hit a four-year high on Friday, on worries over lack of high quality cotton to deliver to the exchange. Moreover, higher exports volumes from the US also supporting prices. US cotton exports in April rose 17.7% from the previous year to 1,715,493 RB according to USDA weekly exports data. Prices have been supportive on concerns over drought like conditions in West Texas which represents approximately 25% of the U.S. cotton production. Exports of 432,600 RB were up 2.6% from the previous week, but little lower from the prior 4-week average.

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