The cotton candy market saw a slight downturn, with prices settling down by -0.17% and closing at 57740. This decrease was influenced by shifts in global consumption and production forecasts for the 2023/24 season.
Projections indicate a decrease in world consumption by 1.3 million bales, primarily due to reductions in key cotton-producing countries such as India, Indonesia, Pakistan, Uzbekistan, and Turkey. Additionally, higher beginning stocks and production contributed to a 2.0 million bale increase in world-ending stocks for the same period.
Specifically, lower consumption in Uzbekistan led to a 400,000-bale increase in beginning stocks for the 2023/24 season. Meanwhile, the Cotton Association of India (CAI) maintained its estimates for domestic consumption in India at 311 lakh bales, with pressing estimates retained at 294.10 lakh bales.
These observations from CAI were based on inputs from members and trade sources. Brazil’s cotton production reached a historic high in the 2022-23 season due to expanded cultivation and productivity. However, despite increased global supply, sluggish demand resulting from unfavorable economic conditions led to bloated inventories and reduced cotton prices worldwide, as reported by the Center for Advanced Studies on Applied Economics (CEPEA).
The International Cotton Advisory Committee (ICAC) projected that cotton production would likely exceed consumption for the second consecutive year globally. Specifically, global cotton lint production is expected to grow by 3.25% to 25.4 million metric tons in the 2023-2024 season, while consumption is forecasted to marginally decline to 23.4 million metric tons.
Technically, the cotton candy market is experiencing fresh selling, indicated by a 3.95% increase in open interest, settling at 316, while prices declined by -100 rupees. Support for cotton candy prices is observed at 57460, and a breach below may lead to a test of 57170 levels. Resistance is expected at 58020, with a move above potentially pushing prices to 58290.