Technically MCX Cotton is under long liquidation as market has witnessed drop in open interest by -1.63% to settled at 7262 while prices down -250 rupees.
Now Cotton is getting support at 20553.4 and below same could see a test of 20456.7 level, And resistance is now likely to be seen at 20823.4, a move above could see prices testing 20996.7.
Cotton on MCX settled down -1.2% at 20650 on higher imports amid availability of poor quality of the fibre in domestic markets which has hurt demand from local buyers.
India's cotton productivity has dropped in recent years owing to worm infestations hurting quality of the crop.
India's cotton output is expected to slip to 34.2-34.6 million bales in 2016-17 according to estimates of Southern Indian mills Association from 39.8 million bales in 2013-14. Poor quality of the fibre and lower output pushed up domestic cotton prices in 2016-17.
Moreover, this month's 2016-17 US cotton forecasts showed higher production and exports relative to last month. US output forecast was raised by 271,000 bales to 17.2 million. The total crop forecast in the central zone during the season 2016-17, is 19.8 million bales, up from 18.475 million bales last year.
Cotton prices were also down on rising demand concerns by the domestic millers over quality and rates. Higher cotton prices prompted domestic millers to import good quality of cotton from USA and African country at cheaper rate.
A huge volume of cotton stocks in China is set to be sold via auctions from March 6th to the end of August 2017. The Chinese government is expected to offer about 30,000 tonnes of cotton.
Trading Ideas:
--Cotton trading range for the day is 20457-20997.
--Cotton dropped on higher imports amid availability of poor quality of the fibre in domestic markets which has hurt demand.
--India's cotton productivity has dropped in recent years owing to worm infestations hurting quality of the crop.
--India's cotton output is expected to slip to 34.2-34.6 million bales in 2016-17 according to estimates of Southern Indian mills Association.
--Cotton prices in spot market dropped by 180.00 rupees and settled at 20890.00 rupees.