Cotton on MCX settled down by -1.02% at 21330 as exports to China may slow down till September due to reserve stocks auctions. Further, rising arrivals from major producing belts also weighed on cotton. Cotton Association of India pegged cotton production for year 2016-17 at 34.1 million bales higher by 1% as compared to 33.8 million bales produced last year while total domestic consumption was estimated at 29.5 million bales. Government also pegged total cotton production for year 2016-17 at 32.507 million bales in its second advance estimates. In addition to this, cautious trading ahead of USDA monthly global supply and demand estimation report which is scheduled to be release also kept cotton under pressure. A huge volume of cotton stocks in China is set to be sold via auctions from March 6th to the end of August 2017. The Chinese government is expected to offer about 30,000 tonnes of cotton a day for sale over the next several months. ICAC predicts that around 2.6 million tonnes of China’s cotton stocks will be sold by the government this year. China’s total stocks, including those in the private sector, are estimated to down to around 9.3 million tonnes at the end of this financial year, representing about 53% of world cotton stocks. China’s ending stock is likely to further drop by 19% to 7.5 million tonnes by the end of 2017/18, representing for 45% of world stocks. Technically market is under long liquidation as market has witnessed drop in open interest by -11.42% to settled at 6771 while prices down -220 rupees, now Cotton is getting support at 21206 and below same could see a test of 21083 level, And resistance is now likely to be seen at 21536, a move above could see prices testing 21743.

Trading Ideas:

Cotton trading range for the day is 21083-21743.

Cotton prices ended with losses as exports to China may slow down till September due to reserve stocks auctions.

Cotton Association of India pegged cotton production for year 2016-17 at 34.1 million bales higher by 1%.

A huge volume of cotton stocks in China is set to be sold via auctions from March 6th to the end of August 2017.

Cotton prices in spot market dropped by 50.00 rupees and settled at 20940.00 rupees.