Cotton On MCX Settled Down By -0.96%

Cotton on MCX settled down by -0.96% at 20540 amid expectations of harvesting a bumper crop because of good seed sales and the early arrival of rains. The early arrival of monsoon rains has prompted many Indian cotton millers and traders to cancel or settle their import contracts, with expectations mounting that the South Asian nation would have a bumper crop of the textile fabric this year.

Contracts worth about 2 lakh bales (each bale of 170 kg) have already been settled after the annual rains hit the peninsular coastline ahead of schedule. According to the latest report of the United States Department of Agriculture (USDA), 2017-18 cotton production is expected to increase because of a rise in the area under cultivation. “Consumption is forecast higher also, both in China and the rest of the world.

Trade is forecast up as stronger imports by Vietnam and Bangladesh more than offset lower imports in India, Pakistan, and Mexico,” said the report. The International Cotton Advisory Committee reduced its expectation for the drop in cotton prices next season, forecasting a drop of nearly 1m tonnes in global stocks despite raising its hopes for production.

The revision came even as the group upgraded by 430,000 tonnes, to 24.0m tonnes, its forecast for world cotton production in 2017-18, which starts in August, reflecting a 100,000-tonne lift to 1.5m tonnes in the Brazilian output estimate, and increased expectations for the US too.

Technically market is under long liquidation as market has witnessed drop in open interest by -4.65% to settled at 4528 while prices down -200 rupees, now Cotton is getting support at 20446 and below same could see a test of 20353 level, And resistance is now likely to be seen at 20716, a move above could see prices testing 20893.
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