Commodity Trading Tips for Cotton by Kedia Commodity

Cotton on MCX settled up by 0.05% at 20780 on increasing arrivals in local mandis and on profit booking. Daily arrivals in the last week held around 180,000 bales slightly higher than the previous week's average arrivals. In addition to that, reports of cancellation of export order also kept cotton prices down. Indian cotton exporters have cancelled orders for around 25,000 bales and postponed shipments of about 200,000 bales by up to a month after a supply shortage pushed up local prices. India's cotton arrivals declined 5.61% in until Feb 10 as farmers are withholding stocks in anticipation of higher prices later though output is projected higher, said a senior official of Cotton Corporation of India (CCI). Cotton arrivals fell to 17.48 million bales till Feb 10 compared to 18.52 million bales in the year ago period. "Farmers are holding the stocks expecting further increase in prices in view of good demand from millers and tight stocks," the official said. Apart from this late commencement of arrivals due to delayed sowing also has impacted supplies, the official said. "However, this year arrivals may continue to pour in the markets till late April," the official said. So far nearly 50% of the cotton output has arrived in the market. Cotton Advisory Board (CAB) has projected India's 2016-17 cotton output at 35.1 million bales as against 33.8 million bales a year ago. Technically market is under short covering as market has witnessed drop in open interest by -7.47% to settled at 6788 while prices up 10 rupees, now Cotton is getting support at 20664 and below same could see a test of 20547 level, And resistance is now likely to be seen at 20894, a move above could see prices testing 21007.

Trading Ideas:

# Cotton trading range for the day is 20547-21007.

# Cotton prices dropped on increasing arrivals in local mandis and on profit booking.

# Daily arrivals in the last week held around 180,000 bales slightly higher than the previous week's average arrivals.

# Indian cotton exporters have cancelled orders for around 25,000 bales and postponed shipments of about 200,000 bales.

# Cotton prices in spot market gained by 170.00 rupees and settled at 20640.00 rupees.