Cotton on MCX settled down -1.96% at 19990 due to subdued demand from traders and stocksists at the spot market. Besides, cotton production will increase from 338 lakh bales in 2015-16 to 351 lakh bales this year owing to above normal rains and favourable agro-climatic conditions too fuelled the downtrend. The production of cotton is expected to touch around 345 lakh bales during 2016-17 as compared to around 338 lakh bales produced in 2015 -16 crop year. Cotton Association of India (CAI) expects that on account of better weather conditions across all cotton growing regions of the country there will be an improvement in productivity. Cotton production fell to about 386 lakh bales in 2014-15 which had earlier reached a record high of over four crore bales during the 2013-14 crop year. The production declined further during the 2015-16 crop year to around 338 lakh bales, the lowest during the last five years. This drastic reduction in the crop during 2015-16 was mainly due to the white-fly attack especially in the northern region. The acreage under cotton is expected to go down to about 105 lakh hectare during 2016-17 from 118.77 lakh hectares during 2015-16, as per the latest estimates of the Directorate of Cotton Development (DOCD). According to the International Cotton Advisory Committee (ICAC), cotton prices in the global market are likely to decline in the second half of 2016 -17 amid increase in production and steady demand. Technically market is under long liquidation as market has witnessed drop in open interest by -7.63% to settled at 4539 while prices down - 400 rupee, now Cotton is getting support at 19863.4 and below same could see a test of 19736.7 level, And resistance is now likely to be seen at 20193.4, a move above could see prices testing 20396.7.

Trading Ideas:

Cotton trading range for the day is 19737-20397.

Cotton prices dropped due to subdued demand from traders and stocksists at the spot market.

Besides, cotton production will increase from 338 lakh bales in 2015-16 to 351 lakh bales this year owing to above normal rains.

The production of cotton is expected to touch around 345 lakh bales during 2016-17 as compared to around 338 lakh bales.

Cotton prices in spot market dropped by 130.00 rupees and settled at 20020 rupees.