The trend of cotton futures (Apr) has reversed to bearish after last week’s steep correction & day’s ahead we may see more downside of 20900 levels.
CAPITALSTARS INVESTMENT ADVISOR
This drift is happening due to two major influencing factors of declining prices of cotton in
the international market & increasing supply pressure in the domestic markets. The Cotton Corporation of India (CCI) has
reportedly started offloading cotton procured so far in the current marketing season. Steep rise in prices in open market prompted
CCI to start sale. The agency has procured around 1.1 million bales (1 bale = 170 kg) of cotton in the ongoing marketing season
that started on Oct 1. The gains in chana futures (Apr) may get restricted from hereon as it may face resistance near 4365 levels.
The arrivals of new domestic chana are expected to gain pace in the new financial year. Guar seed as well as Guar gum futures
(Apr) are looking bullish as they can reach 4400 and 8900 levels respectively. Coming to the fundamentals of guar, it is being
anticipated that exports of the guar gum are likely to be higher in 2018-19. The demand for guar gum has started to rise as a
hydraulic fracturing agent after crude oil prices are trading near its 3-month high levels. The market participants are optimistic
about more orders to come from the food processing sector. In latest news, a newer guar gum product has been developed &
approved for large scale production of potash fertilizers to increase its stability providing better conditioning. It is reported that
orders have been received for this new product & these orders are expected to execute during financial year 2019-20.
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