Cotton on MCX settled up 2.36% at 19970 due to improved demand in the spot market against restricted arrivals from producing belts. Meanwhile, nationwide, daily seed cotton arrivals are estimated at roughly 58,000 lint equivalent bales (170 kgs), including 15,000 from Gujarat and 8,000 from Maharashtra. Also, imports have continued to pour in unabated, first 10 days of October has registered close to 160,000 bales. According to the recent report by USDA released this month, by 2017 US cotton surplus estimates are likely to be lower by 12% than projected last month amid increasing prices and larger-than-expected purchases in China. Inventories as on 31 July, 2017 are estimated to be 4.3 million bales according to USDA. On an average a farmer spends 12 US cents per kilogram of lint produced in 2015 -16, which is around 10 per cent of the net cost of lint production as against 16 US cents in the 2012-13 season. India's cotton imports are expected to rise at 150,000 bales as compared to 100,000 bales previous estimates. USDA also raised India's ending stockpile projection to 11.04 million bales as compared to 10.54 million bales previous forecast. Global cotton production forecast for 2016-17 jumped to 102.69 million bales compared to previous month's estimates of 102.47 million bales. However, USDA slashed United States production forecast for 2016-17 to 16.03 million bales compared to previous estimates of 16.14 million bales. Technically market is under short covering as market has witnessed drop in open interest by -11.5% to settled at 2379 while prices up 460 rupee, now Cotton is getting support at 19593.4 and below same could see a test of 19216.7 level, And resistance is now likely to be seen at 20203.4, a move above could see prices testing 20436.7.

Trading Ideas:

Cotton trading range for the day is 19217-20437.

Cotton prices ended with gains due to improved demand in the spot market against restricted arrivals from producing belts.

According to data from the Ministry of Agriculture, cotton acreage is down 11.7% to 102.79 lakh hectare from 116.41 lakh hectare last year.

India's cotton imports are expected to rise at 150,000 bales as compared to 100,000 bales previous estimates.

Cotton prices in spot market dropped by 430.00 rupees and settled at 20280.00 rupees.