MCX Cotton under short covering

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Technically MCX Cotton is under short covering as market has witnessed drop in open interest by -0.22% to settled at 2241 while prices up 80 rupees.

Now Cotton is getting support at 18500 and below same could see a test of 18430 level, And resistance is now likely to be seen at 18620, a move above could see prices testing 18670.

Cotton on MCX settled up 0.43% at 18570 due to crop damage by pink bollworm attack in the early stages of cotton in major producing belts of Maharashtra.

Further, improved demand from traders and stockists also added support to cotton uptrend. However, good progress in cotton sowing in the country capped further gain.

As per latest data from Agricultural Ministry, cotton is planted in 111.2 lakh hectares (l ha) till last week, higher 20% compared to last year acreage of 92.3 lakh ha for same period.

The U.S. Department of Agriculture early on Thursday reported, net upland sales reductions of 55,700 RB for 2016/2017–a marketing-year low–were down noticeably from the previous week and from the prior 4-week average.

Moreover, exports of 275,300 RB were down 16% from the previous week, but unchanged from the prior 4-week average.

Notwithstanding crop damage due to floods in Gujarat, the largest cotton producing state, India’s cotton output in the forthcoming 2017-18 season starting October is seen increasing by 10-15 per cent on rise in acreage across the country.

Besides, a favourable monsoon in most parts of key growing states such as Maharashtra and Andhra Pradesh, and in North India, is aiding the output. The cotton trade estimates the output to be higher, by 10-15 per cent, for 2017-18 over last year’s output of 337.25 lakh bales of 170 kg each.

Trading Ideas:

–Cotton trading range for the day is 18430-18670.

-Cotton e-nded with gains due to crop damage by pink bollworm attack in the early stages of cotton in major producing belts of Maharashtra.

-As per l-atest data from Agricultural Ministry, cotton is planted in 111.2 lakh hectares (l ha) till last week, higher 20%.

–India’s cotton output in the forthcoming 2017-18 season starting October is seen increasing by 10-15 per cent.

–Cotton prices in spot market dropped by 40.00 rupees and settled at 20430.00 rupees.

Courtesy: Kedia Commodities

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