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Technically Cotton market is under short covering as market has witnessed drop in open interest by 0.04% to settled at 8274 while prices up 40 rupees.
Now MCX Cotton is getting support at 21006.6 and below same could see a test of 20943.3 level, And resistance is now likely to be seen at 21126.6, a move above could see prices testing 21183.3.
Cotton on MCX settled up 0.19% at 21070 on rising demand from traders and stockists at the spot market. Besides, anticipation of lower output from major growing regions by Cotton Association of India also added support to cotton prices.
However, upside seen limited due to improving arrivals on reports of rise in cotton imports. Cotton exports from the country in October is higher at 2.89 lakh bales as per data released by Commerce Ministry. CAI cuts 2018- 19 production estimate by 3 lakh bales to 340.25 lakh bales.
In its monthly report, USDA cut India’s cotton production estimates for 2018-19 (Oct-Sep) by 1.79% or 6.41 lakh bales to 352.18 lakh bales on month. In November, it forecast at 358.6 lakh bales.
As per trade sources, since October deals for the over 25 lakh bales of cotton have been signed, and around 15 lakh bales have already been shipped. Cotton market has been battling weak demand over the past few months, especially due to lack of buying from China on a trade spat with United States.
Falling oil prices is also pressurizing cotton prices as it makes competing synthetic fibers – which use petroleum – cheaper and potentially dent demand for cotton. Export Sales report indicated that just 47,099 RB of 18/19 upland cotton sold for export in the week of 12/6 down compared to time last year and 50.35% lower than the week prior.
Trading Ideas:
–Cotton trading range for the day is 20940-21180.
–Cotton prices gained on rising demand from traders and stockists at the spot market.
–Besides, anticipation of lower output from major growing regions by Cotton Association of India also added support to cotton prices.
–However, upside seen limited due to improving arrivals on reports of rise in cotton imports.
–Cotton prices in spot market gained by 30 rupees and settled at 20960.00 rupees.
Courtesy: Kedia Commodities
Source: Commodityonline.com
