Cotton MCX settled down by -0.76% at 19610 as the US cotton crop's progress showed improvement due to the beneficial rains in West Texas, the top producing region. Besides, lower physical demand from the textile industry, also fuelled the downtrend. India exported 0.121 lakh bales of cotton last week (22 -28 August 2016), which was 0.146 lakh bales previous to last week (15 -21 August 2016), according to the data. The production of cotton is estimated at 33.60 million bales (a bale of 170 kg) for the year 2016-17, marginally lower from 33.77 million bales production in 2015-16, according to the first projection report by Cotton Association of India (CAI).
This is despite a favorable monsoon across the country which has resulted in an increase in productivity of cotton regardless of a 10% fall in area under cultivation for the year 2016-17. The production of cotton in the central zone of India which includes states of Gujarat, Maharashtra and Madhya Pradesh has been estimated at 19.50 million bales as against 18.47 million bales. The production estimates on the other hand for north and south zone stands at 4.2 million bales and 9.3 million bales, respectively.
As per the agriculture department of India, cotton sowing has been done on an area of around 10.15 million hectares as on August 19, 2016, down by 8% compared to 11.02 million hectares in corresponding period of 2015. Technically market is under fresh selling as market has witnessed gain in open interest by 2.71% to settled at 3301 while prices down -150 rupee, now Cotton is getting support at 19486 and below same could see a test of 19363 level, and resistance is now likely to be seen at 19786, a move above could see prices testing 19963.
Trading Ideas:
--Cotton trading range for the day is 19363-19963.
--Cotton prices dropped as the US cotton crop's progress showed improvement due to the beneficial rains in West Texas.
--India exported 0.121 lakh bales of cotton last week (22 -28 August 2016), which was 0.146 lakh bales previous to last week.
--The production of cotton is estimated at 33.60 million bales for the year 2016-17. Cotton prices in spot market dropped by 140.00 rupees and settled at 21180.00 rupees.