Cotton seed oilcake prices have been under pressure for more than a month now. The recovery rally in the prices from the November 2016 low of around ₹1,900 a quintal halted around ₹2,300 in January. After consolidating at this level for some time, prices have started to decline since March. Weak demand from cattle feed traders, coupled with an increase in the supply, pushed the price lower.

On the National Commodity and Derivatives Exchange (NCDEX), the cotton seed oilcake futures contract has tumbled 9 per cent from its February high of ₹2,295 to the current levels of ₹2,090.

Outlook

On the charts, the short-term view for the NCDEX cotton seed oilcake contract is negative. The contract has declined below the 21-week moving average of ₹2,124. This level may act as a good resistance and restrict the upside in the contract in the near term. A fall to ₹2,000 or ₹1,950 looks likely in the short term.

The level of ₹1,950 is a key long-term trend support for the contract. So, the contract may not break below this support at the moment. A reversal from this support may take the contract higher to ₹2,100 and ₹2,200 levels once again. But a strong break below ₹1,950 may add more pressure on the contract. It will also increase the likelihood of the contract extending its fall to ₹1,820, the 200-week moving average support.

The region around ₹2,300 will continue to remain a crucial resistance level. The contract will gain fresh momentum only if it breaches this level decisively. Such a break will ease the downside pressure and open doors for a fresh rally to ₹2,400 or even ₹2,500.

Note: The recommendations are based on technical analysis and there is a risk of loss in trading.

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