Cotton on MCX settled down -1.13% at 20960 on profit booking after prices gained on reports of higher local consumption and export demand amid lower output in southern Indian region. Domestic consumption of the fibre is expected to climb to 29.5 million bales compared to 29 million bales in the previous year, Cotton Association of India (CAI) said. China is expected to increase import of premium quality fibre from India for blending as quality of auctioned cotton is poor. China is expected to increase import of premium quality fibre from India for blending as quality of auctioned cotton is poor. Moreover, domestic cotton output is expected to fall to 34 million bales after output was hit in the southern state of Andhra Pradesh and Tamil Nadu on drought conditions while the Cotton Advisory Board had initially estimated the output of the fibre at 35.1 million bales. Moreover, China may increase import of premium quality fibre for blending purpose as quality of auctioned cotton is not good. After witnessing 20% hike China kept its import higher in Feb as total fibre import in China soared 146% to 138,100 tons while 114,924 tons was imported in Jan, China Cotton Association reported. Meanwhile, South Indian Textile mills have started to import cotton from West Africa and the US as the landed costs are on par with the prevailing market price in the country which will further keep prices volatile. Technically market is under long liquidation as market has witnessed drop in open interest by -2.13% to settled at 7457 while prices down -240 rupees, now Cotton is getting support at 20866 and below same could see a test of 20773 level, And resistance is now likely to be seen at 21116, a move above could see prices testing 21273.

Trading Ideas:

# Cotton trading range for the day is 20773-21273.

# Cotton dropped on profit booking after prices gained on reports of higher local consumption and export demand

# Domestic consumption of the fibre is expected to climb to 29.5 million bales compared to 29 million bales in the previous year.

# China is expected to increase import of premium quality fibre from India for blending as quality of auctioned cotton is poor.

# Cotton prices in spot market gained by 140.00 rupees and settled at 21020.00 rupees.