June Cotton Edged Lower On Thursday

MCX June Cotton edged lower on Thursday due to short covering at higher levels. Currently it is traded at 22 months high on reports of lower stocks and good exports demands. The CAI today cut its estimate for 2017-18 (Oct-Sep) closing stock to 16 lakh bales from 21 lakh bales seen in April. Currently, cotton is trading at 22 months highs in the domestic market as Miller and traders are stocking up cotton for the lean season. Moreover, In its balance sheet for the 2017-18 cotton season, CAI has estimated total cotton supply the till September 30 at 410 lakh bales. This includes the opening stock of 30 lakh bales in October 2017. Domestic consumption has been higher, at 324 lakh bales, while exports, at 70 lakh bales, are higher than earlier estimates of 50- 55 lakh bales.

ICE Cotton settled with little gain in Wednesday ahead of a weekly exports sales report by the USDA. 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. Last week it traded over six-year high earlier in the session on expectations of an increase in buying from major importer China. World supply and demand report showed old crop US ending stocks for cotton down by 500,000 bales to 4.2 million bales amid increase to exports. Informa put their expected 2018 cotton acreage at 14.137 million acres this morning, compared to 13.469 in the March USDA report. The Cotlook A index was down 70 points from the previous day at 100.65 cents/lb on June 12.

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