A significant decline in the area under cotton cultivation in Punjab, Haryana and Rajasthan, has caused cotton candy prices to rise by 0.4 per cent to Rs 57,640.
The area under cotton cultivation in these three states has declined to10.23 lakh hectare from last year's 16 lakh hectare. In Punjab, the area under cotton cultivation has dropped sharply to 97,000 hectare from 7.58 lakh hectare. Similarly, cotton cultivation in Rajasthan declined from 8.35 lakh hectare last year to 4.75 lakh hectare this year, while Haryana's area under cotton fell from 5.75 lakh hectare to 4.50 lakh hectare in 2024.
Delays in shipments from the US and Brazil is also helping boost demand for Indian cotton from mills in neighboring countries. According to the 2024/25 US cotton projections, in June 2024, beginning and ending stocks are expected to remain higher compared to last month, with projected production, domestic use, and exports remaining unchanged. Ending stocks expected to increase by 400,000 bales higher to 4.1 million.
Globally, the 2024/25 cotton balance sheet shows increases in beginning stocks, production, and consumption, with world trade unchanged. World ending stocks are projected to increase by 480,000 bales to 83.5 million from May 2024.
Technically, the market is experiencing short covering, with open interest remaining unchanged at 358 contracts while prices increasing by Rs 230. Cotton candy is currently supported at Rs 57,380, with potential testing of Rs 57,130 if prices fall below this level.
