MCX Cotton under short covering; Support seen at 20230

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Technically Cotton market is under short covering as market has witnessed drop in by 9.81% to settled at 11846 while prices up 100 rupees.

Now MCX Cotton is getting support at 20230 and below same could see a test of 19590 level, And resistance is now likely to be seen at 21230, a move above could see prices testing 21590.

Cotton on MCX settled up by 0.48% at 20880 as CAI has further lowered the country’s cotton crop estimate for crop year 2018-19 to 315 lakh bales of 170 kg each. This is a reduction of six lakh bales from the association’s previous estimate of 321 lakh bales released last month, due to lower output in Maharashtra, North Zone, Madhya Pradesh, Telangana and Andhra Pradesh.

CAI’s estimate lowers cotton crop estimate for 2018-19 season, which began on October 1, 2018, by two lakh bales for Maharashtra, compared to its March estimate. Like-wise, for the North Zone, Madhya Pradesh, Telangana and Andhra Pradesh, CAI has lowered cotton output estimate by one lakh bales each.

Cotton supply is dwindling quickly as 2018-19 crop is likely to be much lower than the initial projection of around 350 lakh bales. In 2018/19, cotton output is estimated at 300.9 l-bales (of 170 kg each), down about 7.4% compared to previous estimate of 324 l-bales as per latest govt Adv Est..

CAI cuts 2018-19 production estimate further by 2 l-bales to 328 l-bales for the year 2018-19. However, higher imports of 27 l-bales (Vs 15) and lower exports of 50 lakh bales (Vs 69) for 2018/19 season is bearish. According to data compiled by DGCIS, country exported 95,712 tonnes (t) of cotton raw including wastes in Feb, down 20.8% compared to 148,948 t last year.

Trading Ideas:
–Cotton trading range for the day is 19590-21590.
–Cotton prices gained as CAI has further lowered the country’s cotton crop estimate for crop year 2018-19 to 315 lakh bales.
–Cotton supply is dwindling quickly as 2018-19 crop is likely to be much lower than the initial projection of around 350 lakh bales.
–In 2018/19, cotton output is estimated at 300.9 l-bales, down about 7.4%.
–Cotton prices in spot market dropped by 170.00 rupees and settled at 21360.00 rupees.

Courtesy: Kedia Commodities

Source: Commodityonline.com