Cotton prices on MCX stabilise after falling last week

Kolkata: Cotton prices on the domestic commodity exchanges have recovered in last two trading sessions on Wednesday and Thursday after correcting last week from its highest levels for the season due to technically driven trades.

The open interest for MCX March cotton contract is seen falling from 7,644 lots on 8th March to 5,176 lots on 15th March. The prices on MCX was also down about 2.37% to Rs. 21,060 per bale on 14th March from the high level of Rs. 21,550 on 8th March. The prices have recovered to Rs. 21,400 per bale today.

"The price decline last week was likely being caused by liquidating of long position by the market participants. On the other hand, the open positions for MCX cotton April and May delivery contracts have increased from 5,957 lots to 6,328 lots and 977 lots to 1,876 lots respectively during the same period.

This scenario is technically strong because the downtrend is caused by the rolling over the positions and will end soon once all the sellers have sold their positions and rolling over their positions," explained Ritesh Kumar Sahu, fundamental analyst (agri commodities), Angel Broking.

"However, expectation of higher cotton demand from China and forecast of El Nino during the later part of current month may keep cotton prices higher,” he further added.