MCX Cotton under short covering; Support seen at 20000
Commodity Online | November 23 2020
UPDATED 12:00:46 IST

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Technically Cotton market is under short covering as market has witnessed drop in open interest by 8.23% to settled at 1138 while prices up 120 rupees.

Now MCX Cotton is getting support at 20000 and below same could see a test of 19850 levels, and resistance is now likely to be seen at 20290, a move above could see prices testing 20430.

Cotton yesterday settled up by 0.6% at 20140 as there is a good demand in the local and international markets for CCI cotton and spinning mills are getting back to 90% capacity.

The Cotton Corporation of India (CCI) has commenced procurement for the 2020-21 season and is ready to procure around 100 lakh bales.

Procurement has commenced in the north zone from October 1 since the season begins early in these regions. Around 8 lakh bales have so far been been procured.

There has been a record carry over stock of around 107.5 lakh bales, but the CCI says 70 lakh bales of the total purchase of 115 lakh bales were disposed and some 45 lakh bales remain.

For 2020-21 the cotton area in India is estimated at 129.57 lakh hectares and production as projected by the Centre’s First Advance Estimates in September 2020, is at about 371 lakh bales.

But the torrential rains received in third week of October, have damaged the crop to a large extent. Also, Cotton Association of India has estimated an output of 356 lakh bales (360 lakh bales).

Trading Ideas:
--Cotton trading range for the day is 19850-20430.
--Cotton prices remained supported as there is a good demand for CCI cotton and spinning mills are getting back to 90% capacity.
--The Cotton Corporation of India (CCI) has commenced procurement for the 2020-21 season and is ready to procure around 100 lakh bales.
--Cotton prices currently hover at around ?5,790 per quintal at the Rajkot mandi, which is below the minimum support price (MSP) of ?5,825.
--In spot market, Cotton gained by 170 Rupees to end at 19890 Rupees.

Courtesy: Kedia Commodities

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