According to Arun Dalal, a leading cotton broker, some mills were seen buying north zone varieties like J-34, which has staple length of 20mm or below. Theses varieties are available at much cheaper rates. Prices are likely to remain weak for the medium staples like 1" to 1.1/16". Pressure of arrival will continue till March 2000. Cotton imports were also seen rising, hence supply would outstrip demand. However, buying has been improved since the last few days.

He said adding that though there is a good demand for staple length of 40 counts or more, sustainable bull run is unlikely due to glut in supplies.Though the textile sector is stillunder performing level of economic growth, the worst seems to be over. Traders are keenly waiting for the new textile policy. So far demand and supply are concerned, the total arrivals are reported at 64.20 lakh out of which 20.15 lakh remained unsold. Total crop has been estimated at 165.30 lakh bales.

As per Cotton Advisory Board (CAB) estimates opening stock for the 98-89 was 36.50, while crop and import remained at 175 lakh bales, and 5 lakh bales respectively. The expected carryover on October 1 was 167.50 lakh bales, said a prominent trader.

Short-term futures outlook bullish
The parallel futures traded at Surendrangar showed upside break out after three-week-long consolidation. The breakout seems bullish as all the momentum indicators have generated buy signals. While the trigger in MACD was already showed upward cross over in the last week itself, the 5-3-3 stockastic indicator also gave out a buy signal. Moving averages cross over and parabolic stop reversal also confirms therally.

The price closed at Rs 351 a maund on the last Thursday. The prices remained range-bound since last three weeks. Having consolidated around Rs 343-347 for the long-time, the future has paved the way to an upward move, it appears. At present, the Rs 345.50 is seen as a key support, while Rs 351.50 is likely to act as a resistance. For the long-term outlook, the 355 is seen as a strong resistance. A weekly close above this level would indicate significant bullishness and the prices may touch Rs 370-377 levels.

In the weekly charts Rs 340 is seen as a rock support. According to Japanese candlestick a `doji' at Rs 340 would support the prices.

Though the fundamentals are bearish, technicals indicates bullish trend. The benchmarket price for the cotton future is Rs 370 and price sealing is Rs 80 from the level. Hence Rs 290 is the floor price, while Rs 450 is the sealing. All the positions are deemed at these level.

It is interesting to note that normally futures price remain bullish in the currentpart. Last year prices rose to Rs 422 a kg, despite a bumper crop. This year the crop is normal, but poor quality and supply glut is hampering the trade sentiment, it is widely perceived.