MCX Cotton likely to move 19017-19457 levels

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Cotton on MCX settled up by 0.16% at 19230 amid improved demand from mills and ginners for new season crop. However expectation of good supplies later this month limited the upside. Industry is estimating 355 lakh bales (170 kg each) for the season 2016- 17 (Oct-Sep), as against the government’s first estimate of 321.2 lakh bales. As per CAB, India’s cotton output is seen at 351 lakh bales (1 bale = 170 kg), up 4% from 338 lakh bales a year ago due to good monsoon and minimum pest infestation. Cotton area is down by 11.6% at 105.6 lh against 116 lh last year. For the current season, cotton arrivals in the country are pegged at 32.5 lakh bales (lb) as on 12 November, 2016.

In October, Punjab, Haryana and Rajasthan together account for at 5.82 lb while Gujarat and Maharashtra added 7.3 lb. Madhya Pradesh too seen about 1.82 lb arrivals. In South India, about 3.36 lb arrivals have been recorded. According to USDA, production in India is forecast at 26.5 million bales (5.77 mt), up marginally from 2015/16. India’s cotton exports in 2016/17 are likely to fall 28 percent from a year ago to 5 million bales as its top buyer Pakistan is set to halve purchases due to rising hostilities and improvement in its own production, industry and government officials said.

Technically market is under short covering as market has witnessed drop in open interest by -18.71% to settled at 604 while prices up 30 rupee, now Cotton is getting support at 19124 and below same could see a test of 19017 level, And resistance is now likely to be seen at 19344, a move above could see prices testing 19457.

Trading Ideas:
–Cotton trading range for the day is 19017-19457.

–Cotton prices gained amid improved demand from mills and ginners for new season crop.

–However expectation of good supplies later this month limited the upside.

–India’s cotton output is seen at 351 lakh bales, up 4% from 338 lakh bales a year ago due to good monsoon and minimum pest infestation.

–Cotton prices in spot market gained by 50.00 rupees and settled at 18950.00 rupees.

Courtesy: Kedia Commodities

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