Resistance seen at 23316 for MCX Cotton

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Cotton on MCX settled down by -2.85% at 22820 due to weak demand after constant rise in the price during this month. Though, some losses were capped as cotton acreage in the country is likely to fall to the lowest in seven years in the 2016-2017 as farmers in key growing area of Gujarat, Maharashtra and Telangana may switch to other crops. India’s cotton output is likely to fall by 12.4% in 2015-16 on pest infestation in Punjab and Haryana and lower yield on weak monsoon rains. Cotton output in 2015-16 will likely fall to 33.8 million bales from 35.2 million bales previous estimates and 38.6 million bales last year, the Cotton Advisory Board said after its meeting.

Total cotton acreage in 2015-16 is estimated at 11.91 million hectares as compared to 12.84 million hectares a year ago. Punjab cotton output estimates for 2015-16 was lowered to 750,000 bales compared to 1.3 million bales a year earlier with yield at 320.35 kilogram per hectare compared to 526.19 kilogram per hectare in the previous year. Haryana cotton output estimates for 2015-16 was lowered to 1.5 million bales compared to 2.3 million bales a year earlier with yield at 414.63 kilogram per hectare compared to 603.40 kilogram per hectare in the previous year.

India’s fibre output for 2016-17 estimated at 27.50 million bales as compared to previous month’s forecast of 28 million bales. Technically market is under long liquidation as market has witnessed drop in open interest by -13.94% to settled at 2346 while prices down -670 rupee, now Cotton is getting support at 22556 and below same could see a test of 22293 level, and resistance is now likely to be seen at 23316, a move above could see prices testing 23813.

Trading Ideas:

–Cotton trading range for the day is 22293-23813.

–Cotton prices dropped due to weak demand after constant rise in the price during this month.

–Though, some losses were capped as cotton acreage in the country is likely to fall to the lowest in seven years in the 2016-2017.

–India’s cotton output is likely to fall by 12.4% in 2015-16 on pest infestation in Punjab and Haryana and lower yield on weak monsoon rains.

–Cotton prices in spot market dropped by 640.00 rupees and settled at 23080.00 rupees.

Courtesy: Kedia Commodities

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