Cotton on MCX settled down by -0.97% at 20320 due to subdued demand from traders and stockists at the spot market. Though, some losses were capped on reports of lower production from major growing regions. India's cotton arrivals falls 5% to 12.83 million bales on late commencement of supplies though output for the 2016-17 is expected to higher. Last year arrivals till date stood at 13.51 million bales, according to CCI (Cotton Corporation of India) data. Cotton inflow in north India (Comprising Punjab, Haryana and Rajasthan) grew to 2.67 million bales from 2.18 million bales a year ago. Maharashtra and Madhya Pradesh cotton arrivals recorded marginal rise but in Gujarat fell 13.7% to 27.75 million bales. Cotton arrivals in Telangana slipped 33% to 1.74 million bales until Jan 19. Apart from this, farmers are also holding the stocks expecting prices to rise in the coming months, source added. Brazilian cotton prices are likely to be firm in 2017 amid lower output of harvested cotton from the 2015-16 crop and lower ending stocks of the same crop. According to CONAB, 2017 began with cotton inventories at only 162,900 tons, the lowest level since 2010-11 and although an increase in the 2016-17 crop is expected, availability of cotton in the market is estimated at 1.6 million tons, a volume last observed in the 2009-10 season. Technically market is under long liquidation as market has witnessed drop in open interest by -5.99% to settled at 8141 while prices down -200 rupees, now Cotton is getting support at 20194 and below same could see a test of 20067 level, And resistance is now likely to be seen at 20544, a move above could see prices testing 20767.

Trading Ideas:

Cotton trading range for the day is 20067-20767.

Cotton prices ended with losses due to subdued demand from traders and stockists at the spot market.

India's cotton arrivals falls 5% to 12.83 million bales on late commencement of supplies though output for the 2016-17 is expected to higher.

Cotton Advisory Board (CAB) projected India's 2016-77 cotton output at 35.1 million bales as against 33.8 million bales a year ago.

Cotton prices in spot market dropped by 60.00 rupees and settled at 20360.00 rupees.