Cotton on MCX settled up by 0.35% at 20020 due to rising domestic as well as export demand in the spot market. Besides, expectation of lower production from major growing regions also fuelled the uptrend. Cotton acreage fell down to about 103 lakh hectares in 2016-17 from 116 lakh hectares in 2015-16, resulting in a drop of production to 351 lakh bales from 338 lakh bales during the period. In 2016 kharif season, all India cotton acreage was reported at 102.79 lakh hectares compared to116.41 lakh hectares during the previous season loosing around 20 per cent area to pulses. The Centre had also asked the farmers not to sow cotton in view of a very bad season in the previous year and some farmers kept away from cotton amid fear of poor performance of Bt Cotton. However it is likely to make a comeback in the upcoming kharif season as farmers have fetched good price for the crop. Prices touched around Rs. 6000 -6500/qtl levels in September 2016 compared to Rs. 4000-4500/qtl during the same period previous year. Farmers who shifted to pulses are likely to make a comeback to cotton following lower prices of pulses. In the 2016-17 cotton marketing year, US cotton exports are likely to increase by 35 per cent. US market share of world cotton trade is forecast to increase as exports have increased 66 per cent year on year in the first five months of the current marketing year. Technically market is under short covering as market has witnessed drop in open interest by -3.49% to settled at 3932 while prices up 70 rupee, now Cotton is getting support at 19916 and below same could see a test of 19813 level, And resistance is now likely to be seen at 20126, a move above could see prices testing 20233.

Trading Ideas:

Cotton trading range for the day is 19813-20233.

Cotton prices ended with gains due to rising domestic as well as export demand in the spot market.

In 2016 kharif season, all India cotton acreage was reported at 102.79 lakh hectares compared to116.41 lakh hectares during the previous season.

In the 2016-17 cotton marketing year, US cotton exports are likely to increase by 35 per cent.

Cotton prices in spot market gained by 80.00 rupees and settled at 19870.00 rupees.