Commodity Trading Tips for Cotton by Kedia Commodity

Cotton on MCX settled up by 0.86% at 19950 due to rising domestic as well as export demand in the spot market. Further, expectation of lower supply from major growing regions also fuelled the uptrend. According to the International Cotton Advisory Committee (ICAC), cotton prices in the global market are likely to decline in the second half of 2016 -17 amid increase in production and steady demand. The ICAC Secretariat has forecast the season-average for Cotlook A Index in 2016-17 (starting October-September) will range between 66 and 83 cents per lb, with a midpoint of 74 cents/lb, which would be 4 cents/lb higher than last season. Global cotton production is expected to increase by 8 per cent to 22.8 million tonnes and global consumption is likely to remain steady at 24.1 million tonnes thereby putting pressure on prices. 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. Technically market is under short covering as market has witnessed drop in open interest by -5.39% to settled at 4074 while prices up 170 rupee, now Cotton is getting support at 19826 and below same could see a test of 19703 level, And resistance is now likely to be seen at 20066, a move above could see prices testing 20183.

Trading Ideas:

Cotton trading range for the day is 19703-20183.

Cotton prices ended with gains due to rising domestic as well as export demand in the spot market.

Cotton prices in the global market are likely to decline in the second half of 2016 -17 amid increase in production and steady demand

The production of cotton is expected to touch around 345 lakh bales during 2016-17 as compared to around 338 lakh bales in 2015-16.

Cotton prices in spot market gained by 30.00 rupees and settled at 19790.00 rupees.