Cotton on MCX settled up by 0.16% at 19350

Cotton on MCX settled up by 0.16% at 19350 on lower arrivals and expectation of fall in domestic output due to pink bollworm attacks in some states. Cotton Advisory Board expects India's cotton output in the year started October to rise 9% to 377 lakh bales (1 bale = 170 kg) due to an increase in acreage and possibility of a high yield in Rajasthan. In 2016-17 (Oct-Sep), India's cotton output was 34.5 lakh bales.

However, the farm ministry's estimate for the current season is lower at 322.7 lakh bales, compared with 330.9 lakh bales a year ago. The USDA raised the US production number slightly to 21.44 million bales, on a 2 lb increase in yield to 902 lbs/ac. The US ending stocks number was lowered 0.3 million bales, as exports were raised by that amount.

The world ending stocks number was trimmed 2.88 million bales to 88 million bales. Production in India was trimmed 0.5 mt, as Pakistan was down 0.95 mt. At a time when cotton has started to arrive in the market, dragging the price down, the Cotton Corporation of India (CCI) has begun procurement operations at select places in Gujarat and Telangana.

According to top CCI officials, the agency will procure at important cotton growing locations as and when the prices go below the Minimum Support Price (MSP) level once the arrivals gather pace.

Technically market is under short covering as market has witnessed drop in open interest by -1.64% to settled at 4264 while prices up 30 rupees, now Cotton is getting support at 19210 and below same could see a test of 19070 level, And resistance is now likely to be seen at 19480, a move above could see prices testing 19610.

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