COMMODITY MARKET FUNDAMENTALS FORUM At IMC Chamber of Commerce and Industry By Vinay Kotak – Director, Kotak Commodities

Area under Production

State wise Production

Balance Sheet Comparison

MSP for long staple cotton has increased by 26 MSP for long staple cotton has increased by 26.16 percent to 5,450 Rs/Quintal. In spite CCI purchases less than even 4 lakh Bales which is just 3% of arrivals Why?

Why is the market still weak? As compared to last year US crop is less by about 3.5 Million Bales, Australian crop is less by 2.2 Million Bales, Pakistani Crop is less by 1.5 Million Bales, Indian Crop is less by 2.5 Million Bales Why is the market still weak?

Bulls vs Bears Bullish Factors Bearish Factors Trade war compromise in short term China to Buy Large quantity of Agri Products including cotton US Fed to Slow Down Rate increase Weaker US Dollar Indian MSP Making US cotton cheapest Growth Indian reduced crop estimate Turkey – USA Normalizing relations 60%+ US Crop sold season start If Crude Prices increase (supply cut by OPEC), Cotton Prices will increase China releases more Quota as their reserve stock has decreased substantially Trade war will take long to settle China not importing yarn China internal yarn and cotton prices weak China Bumper crop Global economy concerns Emerging Markets Weak Consumption Overstated If Crude prices fall or remain constant, pressure from the competing synthetic fibres will drag the cotton prices low. China’s import shift from US Cotton to Brazilian Cotton

Future Price Outlook for next 6 months International – ICE 68-85 cents/lb Range of 25% Domestic Shankar 6 (long staple) 42,000 – 50,000 Rs/Candy Range of 19%