MCX Cotton market under short covering
Commodity Online | September 22 2016
UPDATED 13:35:10 IST

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Cotton on MCX settled up by 1.16% at 21000 due to strong demand from traders and stockists at the domestic spot market. Besides, expectation of lower production for 2016-17 due to weak sowing in the country also fuelled the uptrend. Weak rains in Gujarat, Telangana and Andhra Pradesh hit India's cotton acreage which fell by 11.27% to 10.22 million hectare until Sep 16. India's cotton output for 2016-17 is expected to fall by 2% on delayed arrival of monsoon rains in the country, US department of agriculture (USDA) said in its World Agricultural Supply and Demand Estimates (WASDE) report. Major importer of Indian cotton during the week (12 -18 September, 2016) was Bangladesh.

According to the data released by IBIS, Bangladesh imported 0.120 lakh bales of cotton from India in the past week (12 -18 September, 2016). Other major importers were Vietnam, Thailand and Belgium and their imported volumes were 0.017 lakh bales, 0.006 lakh bales, 0.002 lakh bales and 0.002 lakh bales respectively. India's fibre output for 2016-17 estimated at 26.50 million bales (1 bale = 480lb) as compared to previous month's forecast of 27 million bales. India' 2016-17 cotton production is expected to rise by 8.2% on increased yield in the country. Total cotton output estimates for 2016-17 stood at 35.5 million bales as compared to 35.5 million bales previous year.

Cotton yield for 2016-17 is expected to jump by 18% to 558 kilogram per hectare compared to year ago. Technically market is under short covering as market has witnessed drop in open interest by -2.88% to settled at 3647 while prices up 240 rupee, now Cotton is getting support at 20834 and below same could see a test of 20667 level, And resistance is now likely to be seen at 21104, a move above could see prices testing 21207.

Trading Ideas:

--Cotton trading range for the day is 20667-21207.

--Cotton prices gained due to strong demand from traders and stockists at the domestic spot market.

--India's cotton output for 2016-17 is expected to fall by 2% on delayed arrival of monsoon rains in the country, USDA said.

--India' 2016-17 cotton production is expected to rise by 8.2% on increased yield in the country.

--Cotton prices in spot market gained by 80.00 rupees and settled at 23140.00 rupees.

Courtesy: Kedia Commodities