Cotton on MCX settled up by 0.25% at 20280 tracking firmness in spot demand despite government estimated higher production estimates for 2016-17. Despite lower area coverage, higher productivity of Cotton has resulted in to higher production of 32.12 million bales (of 170 kg each) as compared to 30.15 million bales during 2015-16. Arrivals are expected to pick up in coming days as harvesting has started in Punjab and Haryana and some part of central region too. However, USDA slashed India's exports for 2016-17 to 3.90 million bales as compared to 4.20 million bales previous estimates. Meanwhile, Global cotton production forecast for 2016-17 jumped to 102.47 million bales compared to previous month's estimates of 101.58 million bales. United States production forecast for 2016-17 surged to 16.14 million bales compared to previous estimates of 15.88 million bales. During the week ended September 15, net export sales registrations of upland cotton for shipment during the current 2016-17 season amounted to 197,900 running bales. Cotton production is likely to double this year in Australia as rainfall is helping irrigators and dryland farmers to plant more cotton. According to industry sources, the country is likely to produce over four million bales of cotton n 2016 worth over $2.2 billion. India' 2016-17 cotton production is expected to rise by 8.2% on increased yield in the country. Total cotton output estimates for 2016-17 stood at 35.5 million bales as compared to 35.5 million bales previous year. Technically market is under short covering as market has witnessed drop in open interest by -5.56% to settled at 3549 while prices up 50 rupee, now Cotton is getting support at 20154 and below same could see a test of 20027 level, And resistance is now likely to be seen at 20394, a move above could see prices testing 20507.

Trading Ideas:

Cotton trading range for the day is 20027-20507.

Cotton prices gained tracking firmness in spot demand despite government estimated higher production estimates for 2016-17.

Despite lower area coverage, higher productivity of Cotton has resulted in to higher production of 32.12 million bales.

Arrivals are expected to pick up in coming days as harvesting has started in Punjab and Haryana and some part of central region too

Cotton prices in spot market dropped by 520.00 rupees and settled at 22410.00 rupees.