Technically Cotton market is under short covering as market has witnessed drop in open interest by 1.3% to settled at 2737 while prices up 20 rupees.
Now MCX Cotton is getting support at 22290 and below same could see a test of 22220 level, And resistance is now likely to be seen at 22420, a move above could see prices testing 22480.
Cotton on MCX settled up by 0.09% at 22370 as CAI projected fall in output in its first cotton estimate while the demand is seen modest in the physical market. Cotton Association of India (CAI) trimmed cotton crop estimates for 2018-19 season to 34.8 million bales from 36.5 million bales in 2017-18.
Cotton sowing was reported at 12.06 million hectares for 2018-19 compared to 12.17 million hectare last year, according to Central government data. Moreover, Gujarat, the largest cotton growing state reported 9 million bales of cotton for 2018-19 crop season against 10.5 million bales in the last year while Maharashtra sees the decline at 8.1 million bales compared to 8.3 million bales a year ago.
Export demand may also rise as cotton yarn exports during fourth quarter of FY19 driven by a more than two-fold increase in exports to China, is partly attributable to the low base effect, as exports were down by 56% in the fourth quarter of FY18, it has also been driven by competitive Indian cotton and yarn prices, reports said.
The drop in output could limit exports from the world’s biggest producer of the fibre amid rising demand from top consumer China and in turn support global prices, which are hovering near their lowest level in more than nine months hit last week.
--Cotton trading range for the day is 22220-22480.
--Cotton prices gained as CAI projected fall in output in its first cotton estimate while the demand is seen modest in the physical market.
--CAI trimmed cotton crop estimates for 2018-19 season to 34.8 million bales from 36.5 million bales in 2017-18.
--Cotton sowing was reported at 12.06 million hectares for 2018-19 compared to 12.17 million hectare last year.
--Cotton prices in spot market gained by 110.00 rupees and settled at 22070.00 rupees.
Courtesy: Kedia Commodities