Cotton on MCX settled down by -1.16% at 19560 as government estimated higher production for 2016-17. Further, lower export demand due to rising geo-political tensions between India-Pakistan also fuelled the downtrend. India exported 0.043 lakh bales of cotton last week (09 -16 October 2016), which was 0.054 lakh bales previous to last week (03 -08 October 2016), according to the data. Domestic demand of fiber has been moderate since beginning of the current season started in October due to quality issue as market is lacking with superior quality of cotton. In 2015-2016, exports from Pakistan to India dropped to US$ 400 million from US$ 415 million in 2014-2015. India's exports to Pakistan surged 27% to US$ 1.8 billion over the same period. Cotton arrivals are estimated at around 80,000 lint equivalent bales (170 kgs), including 20,000 from Gujarat and 12,000 from Maharashtra. No arrivals have been registered in Haryana, owing to a ginners' strike which was called to protest a tax proposal from local government. US department of agriculture (USDA) maintained India's cotton output forecast for 2016-17 at 26.5 million bales. Faced with a bumper cotton output of 16 million bales, the United States is making special efforts to enhance its raw cotton exports to India. US cotton production is set to go up 25 per cent in the marketing year (beginning August) against 12.9 million bales recorded last season. Technically market is under long liquidation as market has witnessed drop in open interest by -5.34% to settled at 1931 while prices down -230 rupee, now Cotton is getting support at 19476 and below same could see a test of 19393 level, And resistance is now likely to be seen at 19686, a move above could see prices testing 19813.

Trading Ideas:

Cotton trading range for the day is 19393-19813.

Cotton prices ended with losses as government estimated higher production for 2016-17.

Further, lower export demand due to rising geo-political tensions between India-Pakistan also fuelled the downtrend.

US department of agriculture (USDA) maintained India's cotton output forecast for 2016-17 at 26.5 million bales.

Cotton prices in spot market dropped by 210.00 rupees and settled at 20390.00 rupees.