Cotton on MCX settled down -0.65% at 21310 as traders are avoiding major buying as cotton price that was increasing steeply until the end of February, has become firm during the last 20 days. As the gap in the international and domestic prices has narrowed down, now imported cotton appears to be attractive due to better yarn realisation, productivity and quality. Also traders are eyeing on muted speculative activity ahead of a federal acreage report due next week. From International side Cotton closed higher after holding Support above $76 as market was anticipating another strong week of export demand. Cotton remains mostly a demand story as US export demand has been stronger than any trade expectations so far this year. The demand for US Cotton remains solid despite the fact that the Chinese government is once again offering Cotton into the domestic market. China also imported from India last month. Buying interest in world markets appears to be increasing as the weekly export sales reports have been very strong lately. Ideas that US buyers have a large amount of Cotton bought but unpriced also supported prices. Meanwhile the USDA average price is now 74.28 ct/lb, while ICE certified stocks are now 326,221 bales, from 326,221 bales. Also China imported 138,143 tons of Cotton in February. Calendar year to date imports are now 253,043 tons, up 67% from last year. USDA said that net Upland Cotton export sales were 328,200 bales this year and 201,300 bales next year. Now technically market is under long liquidation as market has witnessed drop in open interest by - 15.99% to settled at 2260, now Cotton is getting support at 21220 and below same could see a test of 21130 level, And resistance is now likely to be seen at 21490, a move above could see prices testing 21670.

Trading Ideas:

Cotton trading range for the day is 21143-21683.

Cotton dropped as traders are avoiding major buying as cotton price that was increasing steeply until the end of February

Exports are likely to be around 5-5.5 million bales with an opening stock of about 4.5 million bales at beginning of 2016-17.

Also traders are eyeing on muted speculative activity ahead of a federal acreage report due next week

Cotton prices in spot market gained by 120.00 rupees and settled at 21080.00 rupees.