Cotton on MCX settled up by 1.78% at 19960 due to rising demand from traders and stockists at the spot market. Though, some gains were capped as India is on track to double its cotton imports this year due to winged pests and droughts. In its first estimate, the Cotton Association of India (CAI), the apex trade body of the fibre crop, has pegged the output for the year starting October 2016 at 336 lakh bales of 170 kg each. During the off-season, CCI auction its existing stock purchased under minimum support price to MSME spinning mills. As per latest estimate by government, cotton is planted in 101.5 lh in the country, down by 7.9 per cent against 110.2 lh last year. Cotton sowing progress increased by more than 2.5% on w-o-w basis due to good the progress of monsoon rains. In Gujarat, India's largest cotton producer, the crop 23.1 lh, down 13.66% from a year ago. In Maharashtra, which has the largest area under cotton, the acreage was 37.6 lh, slightly down from around 38.43 lh a year ago. Cotton area in Punjab and Haryana has declined 27% to 7.56 lakh hectares in the 2016-17 crop year compared to over 10 lh last year. Cotton production in the country is expected to hit a seven-year low in 2016-17 because of a reduction in the area under cultivation and pest attacks in top producer states. Technically market is under short covering as market has witnessed drop in open interest by -1.24% to settled at 3260 while prices up 350 rupee, now Cotton is getting support at 19720 and below same could see a test of 19480 level, And resistance is now likely to be seen at 20090, a move above could see prices testing 20220.

Trading Ideas:

Cotton trading range for the day is 19480-20220.

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

As per latest estimate by government, cotton is planted in 101.5 lh in the country, down by 7.9 per cent against 110.2 lh last year.

Cotton planting in the country is likely to fall to the lowest in seven years in the 2016-17 due to shift to pulses and oilseeds by farmers.

Cotton prices in spot market dropped by 40.00 rupees and settled at 21140.00 rupees.