Technically MCX Cotton is under fresh buying as market has witnessed gain in open interest by 0.92% to settled at 7701 while prices up 20 rupees.
Now Cotton is getting support at 20540 and below same could see a test of 20420 level, And resistance is now likely to be seen at 20760, a move above could see prices testing 20860.
Cotton on MCX settled up by 0.1% at 20660 recovered from lows amid lower output forecast. CAI reduced production forecast for 2017-18 crops by 500,000 bales (170 kgs) to 36.2 million compared to its February projection.
The downward revision in estimates is on account of pink bollworm impact and water shortage in some states. CAI has trimmed output estimates for both Andhra Pradesh and Karnataka by 200,000 bales each.
Moreover, CAI expects closing stock in current season to drop to 2.2 million from 4.2 million bales estimated in January while opening stock is unchanged at three million bales.
Consequently, association expects net reduction of stocks by 800,000 bales compared to rise of 1.2 million bales implied by earlier opening and closing stock projection. Exports are affected on quality concerns caused by severe pink bollworm infestation in major cotton growing region.
Further, higher input cost owing to rally in domestic price is likely to affect buying capacity of millers. Meanwhile, CAI hiked its domestic consumption forecast by one million bales to 33 million and exports projection is raised by 500,000 bales on month to six million.
The Cotton Corporation of India (CCI) purchased nearly 485,000 bales cotton at minimum support price (MSP) fixed by government as prices are ruling firm, said sources. In a bid to protect the interest of farmers government asked the state agency to purchase natural fibre at state fixed MSP if prices fall below that level.
--Cotton trading range for the day is 20420-20860.
--Cotton prices recovered from lows amid lower output forecast.
--CAI reduced production forecast for 2017-18 crops by 500,000 bales (170 kgs) to 36.2 million compared to its February projection.
--CAI has trimmed output estimates for both Andhra Pradesh and Karnataka by 200,000 bales each.
--Cotton prices in spot market dropped by 150.00 rupees and settled at 19870.00 rupees.
Courtesy: Kedia Commodities