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The overall trend of cotton futures (Dec) is looking bearish and is expected to come down & test 21700 levels, facing resistance near 22000 levels. Despite of the fact that cotton crop for 2018-19 season is estimated at 340.25 lakh bales of 170 kgs lower by 3 lakh bales than its previous estimate of 343.25 lakh bales made during last month, the prices are not showing a positive reaction. The reason behind this phenomenon is due to the projection of higher output of U.S. cotton in 2018/19. Production is raised 180,000 bales due mainly to a 300,000-bale increase in Texas. Domestic mill use and exports are unchanged. Ending stocks, forecast at 4.4 million bales in 2018/19, are 100,000 bales above both last month and the 2017/18 estimate. Guar seed futures (Jan) will probably consolidate in the range of 4380- 4450 and trade with a positive bias owing to projection of lower output. While, the
upside in guar gum futures (Jan) may remain capped facing resistance near 8970 levels. These counters are not moving in tandem with each other & it can be judged from the fact that guar gum-guar seed ratio has sharply plunged from 2.19 to 2.0 within a month owing to lower than expected export demand of guar gum on the contrary more demand of guar seed to meet the requirement of cattle feed called korma and churi. An extended upside can be seen in chana futures (Jan) towards 4650, taking support near 4560 levels. The main factor that will push the prices forward is the lower sowing this season. Already, it is reported to be 13% shortfall with the area dropping to 77.27 lh as compared to 88.94 LH same week last year.
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