MCX Cotton market under short covering; Resistance seen at 21836

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Cotton on MCX settled up by 0.56% at 21720 as production in the country in 2015-16 is expected to decline to 338 lakh bales from 386 lakh bales, a fall of more than 12 percent. India 2016-17 cotton kharif sowing till Jul 22 stood at 8.68 million hectare as compared to 9.95 million hectare same period year ago. Cotton sowing in Gujarat, major fibre producing state, slumped by 24.80% to 1.76 million hectares up-till Jul 18 on late arrivals of monsoon. 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. Technically market is under short covering as market has witnessed drop in open interest by -17.99% to settled at 515 while prices up 120 rupee, now Cotton is getting support at 21556 and below same could see a test of 21393 level, and resistance is now likely to be seen at 21836, a move above could see prices testing 21953.

Trading Ideas:

–Cotton trading range for the day is 21393-21953.

–Cotton gained as production in the country in 2015-16 is expected to decline to 338 lakh bales from 386 lakh bales, a fall of more than 12 percent.

–India 2016-17 cotton kharif sowing stood at 8.68 million hectare as compared to 9.95 million hectare same period year ago.

–Cotton sowing in Gujarat, major fibre producing state, slumped by 24.80% to 1.76 million hectares up-till Jul 18 on late arrivals of monsoon.

–Cotton prices in spot market dropped by 150.00 rupees and settled at 22470.00 rupees.

Courtesy: Kedia Commodities

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