Cotton on MCX settled down by -1.18% at 19300 after government estimated higher production estimates for 2016-17. Buying activities are subdued in physical market while export demand is also negligible at current time which may weigh on cotton prices. In the meanwhile, ongoing border tension between India and Pakistan put pressure on Indian cotton prices as talks on withdrawal of Most Favoured Nation (MFN) status to Pakistan may affect export supply adversely as Pakistan emerged as one of the major Indian cotton importer in recent years.
Despite lower area coverage, higher productivity of Cotton has resulted in to higher production of 32.12 million bales (of 170 kg each) as compared to 30.15 million bales during 2015-16, government data showed. Also, The Cotton Association of India (CAI) retained August estimate of the cotton crop for the 2016-17 at 33.6 million bales that is at the same level as in the last month. India's cotton production estimates for 2016-17 stood at 33.6 million bales as compared to 33.7 million bales last year. There are reports of heavy rainfall in Gujarat and Maharashtra which may disrupt ongoing cotton harvesting activities in central region.
Harvesting has started in some part of Gujarat but yet to pick up as late sowing was seen in Gujarat this year owing to delayed onset of monsoon rainfall. Technically market is under long liquidation as market has witnessed drop in open interest by -2.7% to settled at 2955 while prices down -230 rupee, now Cotton is getting support at 19236 and below same could see a test of 19173 level, And resistance is now likely to be seen at 19406, a move above could see prices testing 19513.
--Cotton trading range for the day is 19173-19513.
--Cotton prices ended with losses after government estimated higher production estimates for 2016-17.
--Buying activities are subdued in physical market while export demand is also negligible at current time.
--Despite lower area coverage, higher productivity of Cotton has resulted in to higher production of 32.12 million bales.
--Cotton prices in spot market dropped by 580.00 rupees and settled at 21630.00 rupees.
Courtesy: Kedia Commodities