MCX Cotton under short covering; Support seen at 15870
Commodity Online | July 06 2020
UPDATED 12:00:48 IST

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Technically Cotton market is under short covering as market has witnessed drop in open interest by 1.21% to settled at 4237 while prices up 90 rupees.

Now MCX Cotton is getting support at 15870 and below same could see a test of 15770 levels, and resistance is now likely to be seen at 16050, a move above could see prices testing 16130.

Cotton yesterday settled up by 0.57% at 15970 on short covering after prices remained under pressure due to concerns about demand in the aftermath of Covid-19. Indian spinning mills are running at 50 per cent capacity due to shortage of labour or for want of order for yarn.

According to data from the Agriculture Ministry of Agriculture, as on 26 June, the area under cotton was 71.69 lakh hectares. In the same period in the last kharif season, the area under cotton was 27.08 lakh hectare.

Amid shortage of migrant farmworkers due to coronavirus outbreak, Punjab this year has set a record by bringing 5.01 lakh hectares under cotton cultivation, which is the highest since 2011-12 kharif or summer-sown crop season.

The Punjab agriculture and farmers welfare department had set a target of sowing cotton on 5 lakh hectares under its crop diversification programme. Australia’s cotton crop area has plunged to the smallest in four decades as years of drought slashed growers’ access to water and prevented planting.

As picking in the country finishes for another season, 2019-20 production is estimated to have decreased 72% on the year to 134,000 tons of lint because of low irrigation water supplies, Australian government forecaster Abares said in its June report.The area planted for cotton is estimated to have declined by 83% to 60,000 hectares, the lowest since 1978–79, according to the report.

Trading Ideas:
--Cotton trading range for the day is 15770-16130.
--Cotton gained on short covering after prices remained under pressure due to concerns about demand in the aftermath of Covid-19.
--Indian spinning mills are running at 50 per cent capacity due to shortage of labour or for want of order for yarn.
--According to data from the Agriculture Ministry of Agriculture, as on 26 June, the area under cotton was 71.69 lakh hectares.
--In spot market, Cotton dropped  by 50 Rupees to end at 15760 Rupees.

Courtesy: Kedia Commodities