MCX Cotton under short covering; Resistance seen at 20846.6

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Technically Cotton market is under short covering as market has witnessed drop in open interest by 0.47% to settled at 6546 while prices up 150 rupees.

Now MCX Cotton is getting support at 20686.6 and below same could see a of 20593.3 level, and resistance is now likely to be seen at 20846.6, a move above could see prices testing 20913.3.

Cotton on MCX settled up 0.73% at 20780 due to reduces arrivals of the crop from Tamil Nadu region. As per reports, there is a reduction of 50,000 bales in the crop estimate for Tamil Nadu compared to the previous month’s estimate.

Indian cotton production for the 2019-20 season is seen at 29 million 480 lb bales, the U.S. Department of Agriculture (USDA) said in a report down 1% from earlier estimates.

The production decline is the result of reduced plantings in central Maharashtra, where farmers are shifting towards soybeans as well as in Karnataka, where farmers are switching to pulses and corn, the attache said.

While overall plantings are expected to fall, they are happening at an accelerated rate this season in part because of the delayed monsoon, the report said. As of July 19, cotton planted area was 5% higher than the five-year average, with plantings especially accelerated in the states of Rajasthan and Odisha.

At 29 million bales, the anticipated 2019-20 output is down only slightly from the 29.3 million bales forecasted earlier this year, but still about 9% larger than the 2018-19 crop. USDA increase production forecast for cotton in by 1.75% this month to 29 million bales while the stocks jump by 17.8% to 8.93 m-bales. 

Trading Ideas:
–Cotton trading range for the day is 20590-20910.
–Cotton prices gained amid deficient rain in main cotton growing districts of Gujarat capped downside momentum.
–According to IMD, monsoon rain this season is down by 30% to 70% in Suarashtra region which may severely affect cotton grown in the area.
–Area in Gujarat under cotton is higher by 64% as on 12-Jul-19 at 18.76 lakh ha compared to 11.44 lakh ha last year.
–Cotton prices in spot market gained by 110.00 rupees and settled at 20350.00 rupees.

Courtesy: Kedia Commodities

Source: Commodityonline.com