June Cotton Edged Lower On Monday

MCX June Cotton edged lower on Monday tracking weakness in International cotton prices. Cotton Advisory Board has revised India's ending stocks in the year started October to 43.3 lakh bales (1 bale = 170 kg) due to a fall in consumption by the mills. Recently, CAI cut its estimate for 2017-18 (Oct-Sep) closing stock to 16 lakh bales from 21 lakh bales seen in April. Cotton acreage till last week was higher by 1.5% on year to 16.9 lakh hac, according to the farm ministry data. Area under cotton rose as sowing started early in Karnataka due to early rains in May. However, the rise in area has been marginal because in Gujarat, one of the largest growers of cotton, acreage was down 66.3% on year at 47,900 ha.

ICE Cotton fell over 2% on Monday to hit a three-week low, weighed down by trade tensions between the United States and China and rains in West Texas, a major producing region. China's tariff hike decision will affect up to 659 U.S. goods, including cotton. Areas in the Texas High Plains received rains over the weekend, which were much needed for that region. Friday’s CFTC data showed managed money trimming the cotton net long position by 788 contracts to a net position of 88,911 contracts as of Tuesday. On Thursday, China announced they have approved 800,000 MT (3.673 million 480-lb bales) for additional import quota of cotton in 2018. During the current quarter (Apr-Jun) prices have surged about 18% on concerns of dry weather in West Texas, a major producing region and trade war with China.

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