Cotton on MCX settled down by -0.27% at 18320 tracking weak spot demand after prices gained on anticipation of good demand for new season crop. The arrivals have begun in Gujarat, Madhya Pradesh and are expected to pick in Haryana where the ginners have called off their strike. Despite less area under cotton, a good monsoon is expected to rescue the 2016-17 production. People in the industry are estimating 355 lakh bales (170 kg each) for the season 2016-17 (October-September), as against the government's first estimate of 321.2 lakh bales. As per CAB, India's cotton output is seen at 351 lakh bales (1 bale = 170 kg), up 4% from 338 lakh bales a year ago due to good monsoon and minimum pest infestation. Cotton area is down by 11.6% at 105.6 lh against 116 lh last year. For the current season, cotton arrivals in the country are pegged at 10 lakh bales as on 21st October, 2016. Punjab and Haryana together contributed closed half of the arrivals at 4.13 lakh bales while Gujarat and Maharashtra added 3.1 lakh bales. Madhya Pradesh too seen about 1 lakh bales arrivals. According to USDA, production in India is forecast at 26.5 million bales (5.77 mt), up marginally from 2015/16. Domestic cotton spot prices are suppressed down by 8 per cent in month of October compared to the previous month as the fresh arrival of crop has picked in Northern markets of Punjab, Haryana and Rajasthan. Technically market is under long liquidation as market has witnessed drop in open interest by -3.05% to settled at 3149 while prices down -50 rupee, now Cotton is getting support at 18246 and below same could see a test of 18173 level, And resistance is now likely to be seen at 18416, a move above could see prices testing 18513.

Trading Ideas:

Cotton trading range for the day is 18173-18513.

Cotton prices dropped tracking weak spot demand after prices gained on anticipation of good demand for new season crop.

The arrivals have begun in Gujarat, Madhya Pradesh and are expected to pick in Haryana where the ginners have called off their strike.

For the current season, cotton arrivals in the country are pegged at 10 lakh bales as on 21st October, 2016.

Cotton prices in spot market dropped by 400.00 rupees and settled at 18240.00 rupees.