Cotton futures to be under pressure

Cotton futures in India are expected to be under pressure on reports of good sowing progress and higher stock levels, according to Angel Commodities. MCX cotton fell more than 1.2 per cent recently on anticipation of good production in the next season as sowing progress in India has started in a brisk manner. As per latest data from Agricultural Ministry, cotton is planted in 14.1 lakh hectares (l ha) recently, higher by 43 per cent compared to last year acreage of 9.87 l ha for same period.

In Haryana, acreage was at 630,000 ha, up 28 per cent on year, while in Punjab, the area under cotton was up 52 per cent at 382,000 ha, the data showed. As per ICAC, Cotton area in India is forecast to expand by 7 per cent to 11.3 million hectares, and production could increase by 3 per cent to 6 mt in 2017/18.

ICE futures dropped to their lowest since end-January on expectations of a robust harvest. Moreover, lower US export outlook for the new crop, weighed on the prices. Net upland sales for the 2016 – 17 crop last week was totaled 82,700 running bales, down 26 per cent from the previous week. US sowing data showed 92 per cent of cotton crops were planted in the US by the week ended June 12, up from 80 per cent in the previous week. USDA June report draw a bearish trend (from 14 million to 13.5 million bales) for the US cotton exports while ending stocks at 9 year high at 5.5 million bales. Speculators reduced a bullish stance in cotton futures and options to the lowest since November 2016.