Cotton on MCX settled down by -1.46% at 20270 due to good demand from the industrial buyers against lower supply in the domestic market. Besides, news on procurement by CCI and lower than expected domestic production also supporting cotton prices. In its mid- season estimates, the apex cotton trade body, Cotton Association of India (CAI) has revised its cotton crop estimate downward at 341 lakh bales (each of 170 kg) for the year 2016-17 as against the earlier estimate of 346 lakh bales, projected in October. Announcing its December 2016 estimate of the cotton crop for the 2016-17 season (beginning from October 1, 2016), CAI projected total cotton supply of 404 lakh bales, with domestic consumption at 290 lakh bales, thereby leaving an available surplus of 114 lakh bales. “The arrivals of cotton during the ongoing 2016-17 crop year are estimated to be lower than those up to the same period last year due to holding back of seed cotton by farmers,” CAI said in a statement here. The production estimate for Maharashtra has been revised downward to 86 lakh bales against 87 lakh bales. A sharp decline is estimated for Karnataka from 22 lakh bales earlier to 19 lakh bales in December 2016. The CAI estimates cotton imports of about 18 lakh bales for the year 2016-17, which is about 4 lakh bales lower than 2015-16. Technically market is under long liquidation as market has witnessed drop in open interest by -29.72% to settled at 1724 while prices down -300 rupee, now Cotton is getting support at 19994 and below same could see a test of 19717 level, And resistance is now likely to be seen at
20644, a move above could see prices testing 21017.

Trading Ideas:

# Cotton trading range for the day is 19717-21017.

# Cotton prices ended with gains due to good demand from the industrial buyers against lower supply in the domestic market.

# CAI has revised its cotton crop estimate downward at 341 lakh bales (each of 170 kg) for the year 2016-17

# The production estimate for Maharashtra has been revised downward to 86 lakh bales against 87 lakh bales.

# Cotton prices in spot market gained by 240.00 rupees and settled at 20650.00 rupees.