Cotton on MCX settled up by 1.02% at 20780 due to good physical demand despite increase in arrivals in the physical market. Moreover, reports of lower domestic production and procurement by CCI may also support prices. 

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In Dec 2016, India exported about 60,850 tonnes cotton to China, up 89% yoy. China imported highest cotton from India than from any other country in the month of December 2016. In first estimate of the 2017/18 by ICAC, world cotton output will rise by 2% to 23.4 mt. due to an expected to grow of planting area by 5% to 30.6 million hectares after two seasons of contraction. India's cotton arrivals falls 5% to 12.83 million bales until Jan 19 on late commencement of supplies though output for the 2016-17 is expected to higher. Last year arrivals till date stood at 13.51 million bales, according to CCI (Cotton Corporation of India) data. 

Cotton inflow in north India (Comprising Punjab, Haryana and Rajasthan) grew to 2.67 million bales from 2.18 million bales a year ago. Technically market is under short covering as market has witnessed drop in open interest by -5.28% to settled at 7840 while prices up 210 rupees, now Cotton is getting support at 20640 and below same could see a test of 20500 level, And resistance is now likely to be seen at 20910, a move above could see prices testing 21040.