Commodity Trading Tips for Cotton by Kedia Commodity

Cotton on MCX settled down by -0.1% at 20390 on profit booking after prices gained amid increasing prospects of higher imports and improved demand from bulk consumers. The production of cotton is expected to touch around 345 lakh bales during 2016-17 as compared to around 338 lakh bales produced in 2015-16 crop year. Cotton Association of India (CAI) expects that on account of better weather conditions across all cotton growing regions of the country there will be an improvement in productivity. Cotton production fell to about 386 lakh bales in 2014-15 which had earlier reached a record high of over four crore bales during the 2013-14 crop year. The production declined further during the 2015-16 crop year to around 338 lakh bales, the lowest during the last five years. This drastic reduction in the crop during 2015-16 was mainly due to the white-fly attack especially in the northern region. The acreage under cotton is expected to go down to about 105 lakh hectare during 2016-17 from 118.77 lakh hectares during 2015-16, as per the latest estimates of the Directorate of Cotton Development (DOCD). Department of Agriculture (USDA) has estimated 2016/17 global cotton production at 104.2 million bales, an expansion of 8 per cent over the previous season. Improved weather conditions, also led to the growth in output of the global cotton crop. Technically market is under long liquidation as market has witnessed drop in open interest by -1.6% to settled at 4914 while prices down -20 rupee, now Cotton is getting support at 20300 and below same could see a test of 20210 level, And resistance is now likely to be seen at 20490, a move above could see prices testing 20590.

Trading Ideas:

Cotton trading range for the day is 20210-20590.

Cotton prices dropped on profit booking after prices gained amid increasing prospects of higher imports and improved demand from bulk consumers.

The production of cotton is expected to touch around 345 lakh bales during 2016-17 as compared to around 338 lakh bales

USDA has estimated 2016/17 global cotton production at 104.2 million bales, an expansion of 8 per cent over the previous season

Cotton prices in spot market gained by 160.00 rupees and settled at 20150.00 rupees.