The Season 2018 -2019 started with bullish sentiment in India. Indian cotton crop was predicted 343 lakh bales at the start of the season against 365 to 375 lakh bales of season 2017-2018. Opening stock was low and mills requirement of new cotton was high. With bull sentiment season touched double top at 47,150 on 15th October at the start of the season.
As arrival picked up market could not sustain bull run. Though mills and trade agreed with short production, market started to fall on the full flow of arrival. By the start of November Indian basis went up to nearly 600 and forward basis was near to 700 on. MNCs started selling and due to bullish sentiment Indian mills and ginners also bought forward from merchants. In this situation those who should buy had sale on their book, and ginners who should have sale on book were long on book. To reverse this position both buyers and sellers had to double their net reverse business due to which market touched new bottom of 42,150 on Feb-27.
When kapas price bottomed and most of the big supply was over, that was the right opportunity to go long. In absence of low quality and low rate availability of kapas to reduce cost and majority of ginning factories were working and very low Indian basis, it was real opportunity for go long in last week of the February.
Due to U.S. China trade war yarn off take was low and market felt cash crunch which resulted in reduction of consumption and due to high Indian basis mills booked cheaper imported cotton. By August market started falling which gave seasonal low of 40,900 on 25-09-2019 and season and ended holding 41,000 levels.