After making a new record high, strong profit-booking is being seen in cotton. Cotton has registered a decline of 6% in the last one week on CBOT. At the same time, the price has broken around 5% on MCX in three days. But will this decline continue or are the fundamentals still strong in cotton?
Why the decline in cotton?
After making a new high on MCX, profit-booking is being seen. On Friday, a high of 31500 was made on MCX. The CBOT has also slipped from the high of September 2011. Power crisis in China is expected to reduce demand. WASDE has lowered China’s consumption estimate. According to WASDE, China’s consumption may decrease by 1 million bales. There is pressure due to new arrivals in Gujarat, Maharashtra.
Strong fundamentals in cotton
There is a decline in the production of cotton all over the world. Production in the US is projected to be down 3%. Production in India is also expected to remain low. World cotton consumption growth has seen an increase of 2.9%. Prices have got support due to increase in demand after Corona.
Relief on edible oils during the festival, the government made a big cut in import duty
Meanwhile, talking about other commodities, crude has slipped from a three-year high in the international market. Brent’s price has come down to $83. After the big rally, profit-booking and fear of rising inflation kept pressure on the prices.
Due to the softening of the dollar, buying in gold has increased. The price on Comex has reached near $ 1775. Silver is also trading with gains. Silver is trading above 62,000 on MCX.
The price of aluminum is at the high of 2008. In China, the fear of supply shortage due to power crisis has increased the brightness. Zinc also ran around 4% on the LME. Strong buying is also being seen in Lead, Nickel and Copper.
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