As unlocking activity continues, demand prospects of Indian cotton continue improving — be it local demand or overseas demand, according to a report by Religare Broking.
In October month, traders had exported seven lakh bales, and contracts for another one million bales have been signed for November shipment, as per cotton dealers.
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Exporters also say that India’s cotton exports could jump 40 percent in 2020/21 from a year ago to seven million bales, the highest in seven years, as the depreciation of the rupee and a rally in global prices allow exporters to obtain the export contracts.
Indian cotton is being offered at around 74 cents per lb, cost, and freight-basis, to buyers in China, Bangladesh, and Vietnam for November shipment, which is cheaper than 77 cents offered by competitors like Brazil and the US. Cheapest export offers make overseas sales viable from India — a key bullish driver.
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The report said enhanced global/domestic demand for mask and surgical gown production along with increasing procurement activity shall be supportive for prices.
Palm oil markets remain strong as well due to persistent buying interest in Malaysian and Indonesian markets where production outlook continues declining against improving export prospects especially from India, Religare Broking said.
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Palm oil bears a positive correlation with RM oil, which in turn has a similar impact over RM seed. The old season crop estimate is seen lower year on year because of heavy rainfall across regions of Haryana and Rajasthan during March and April this year.
Traders and farmers have estimated the possible damage around 20- 25 percent roughly. The festive season buying interest remains healthy in physical markets., which is a supportive factor in addition to suspended sale from NAFED. Stockists now seem to consider fresh deals as prices have corrected in recent sessions.
On soybeans, the report said that fundamentally, the market shall continue finding support after moderate price depreciation amid stable retail demand due to the festive season in addition to growing export prospects in Soymeal. Strength in edible oils shall add to the positive undertone.
Excessive rainfall impact in Madhya Pradesh and Maharashtra during the last week of August and later part of September respectively is most likely to lower the domestic Soybean crop versus earlier estimates. Under this scenario the chances of rising in prices from a longer-term perspective shall improve further, the report said. (IANS)