Cotton futures on MCX closed higher on Tuesday and continue its sideways trend amid reports of higher supplies this season through imports and good stocks with the farmers. According to 3rd advance estimates for 2016/17, higher productivity of Cotton has resulted into higher production of 32.51 million bales (of 170 kg each) as compared to 30.01 million bales during 2015-16. 

According to CCI, about 302 lakh bales of cotton arrivals were recorded till 4th May in the country. The domestic cotton arrivals in April are higher by 49% on year at 2.64 lakh tonnes (lt) compared to 1.77 lt last year, as per Agmarknet data.

Outlook

Cotton futures are expected trade sideways to lower on news that the monsoon may be normal this year. There are reports of higher stock levels and anticipation of higher sowing acreage in the country. Moreover, lower exports prospects and higher imports keeping prices under pressure. Poor to average response to state auction in China may support world cotton prices but rapid sowing progress in the US will further pressurize world cotton prices.

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