Cotton on MCX settled down -0.15% at 20390 expectation of better production as there is good weather across cotton sowing states like Gujarat and Maharashtra. Cotton production is likely to decline by 10 to 15 per cent in Maharashtra this season according to agriculture ministry. Farmers postponed the sowing of cotton following delayed monsoon and shifted to other crops like pulses and oilseeds. However, the overall shortfall in output is likely to ensure higher returns for the farmers. China state reserve continued to record strong sales amid strong buying by domestic mills, tight supply and lesser imports and sold 104,200 tons of cotton during the week. China sold 104,200 tons in auction which is 69.36% of total 115,240 tons put for auction. India exported 0.812 lakh bales of cotton in the month of July 2016 compared to 1.640 lakh bales of cotton during previous month. Imports on the other hand stood at 2.085 lakh bales of cotton compared to 1.501 lakh bales of cotton during previous month. The cotton area in Telangana, one of the top cotton growing States, generally overshoots the average area. But this year, the government has begun a campaign well before the season, asking the farmers to go slow on cotton and go to soyabean and maize instead. The government said cotton prices could fall this year in international market and could impact the prospects of farmers. Technically market is under fresh selling as market has witnessed gain in open interest by 3.36% to settled at 3508 while prices down -30 rupee, now Cotton is getting support at 20206.6 and below same could see a test of 20023.3 level, And resistance is now likely to be seen at 20506.6, a move above could see prices testing 20623.3.

Trading Ideas:

Cotton trading range for the day is 20023-20623.

Cotton prices dropped expectation of better production as there is good weather across cotton sowing states.

China state reserve continued to record strong sales amid strong buying by domestic mills, tight supply and lesser imports.

India exported 0.812 lakh bales of cotton in the month of July 2016 compared to 1.640 lakh bales of cotton during previous month.

Cotton prices in spot market gained by 10.00 rupees and settled at 21930.00 rupees.