Cotton on MCX settled up by 0.47% at 19140 on improved demand from bulk consumers and on lower output estimates. Cotton export is likely to show a strong performance in the coming months as China's fresh cotton quality was average and in order to meet their requirements for high quality fiber they may import from India and Pakistan. Further, overseas enquires of Indian fiber from Bangladesh may restrict the major fall in prices. Export demand Indian cotton is also likely to improve from Pakistan as Pakistan government has lifted the ban on import cotton from India. 

The Cotton Corporation of India is purchasing fiber at market rates from various parts of the country to ensure supplies for its customers in the textiles industry. The corporation is expected to purchase up to 15 lakh bales this season according to official sources. Market prices have firmed up recently as arrivals have declined post demonetization. 

Cotton arrival which usually increases during Nov-Dec was delayed due to Demonetisation. So, it is expected arrivals will rise in Jan-Feb month as farmers have started accepting cheques and now liquidity situation is also improving across the country as RBI relaxed norms for cash withdrawal limit. Cotton output in 2016-17 is expected to rise to 35.1 million bales from 33.8 million bales last year, the Cotton Advisory Board said.