Cotton On MCX Settled Down

Cotton on MCX settled down -0.33% at 21260 on higher output in dometic market. 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, cautious trading ahead of USDA monthly global supply and demand estimation report which is scheduled to be release today also kept cotton under pressure. Arrivals of cotton in northern India increased 37% on year during Oct-Feb to 3.63 mln bales (1 bale = 170 kg), Bathinda-based Indian Cotton Association said in a monthly report. However, the rise in supplies is a result of low base effect as over 50% of crop in Punjab was destroyed by severe white fly attack last year.

Traders said arrivals so far in north India were around 20% below normal for this time of the year. According to Cotton Association of India, the country's arrival is estimated at 15.78 mln bales as on January end, 17% lower than 19.11 mln bales a year ago. Of the total quantity that has arrived in north India so far, around Of the total quantity that has arrived in north India so far, around 3.58 mln bales had been consumed by the mills during Oct-Feb, the report said.

Technically market is under long liquidation as market has witnessed drop in open interest by -8.54% to settled at 6193 while prices down -70 rupees, now Cotton is getting support at 21106.6 and below same could see a test of 20953.3 level, And resistance is now likely to be seen at 21366.6, a move above could see prices testing 21473.3.

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