By MICHELLE ROOK 

Cotton prices bounced 70 points in the December contract on Wednesday on short covering in an oversold market.

Cotton has seen an ugly correction from the huge rally the first part of the year when old crop prices pushed above the $1 mark

However, the market has lost over 30 cents since that point or nearly 30% of its value from the highs set in March and old crop contract have hit four year lows.

John Payne with Advance Trading says cotton is facing both supply and demand problems.

First, the run up in prices at the start of the year attracted additional acres and USDA forecast production to be up 1 million bales in the July WASDE.

New crop ending stocks were also raised from June by 1.2 million bales to 5.3 million.

Payne says that has combined with poor demand to pressure the market, resulting in a major correction.

Exports are down mainly due to the slower global and Chinese economy which has meant poor consumer demand for goods like clothing.

"Consumers in China have still not recovered from COVID," he says.

Plus, there is concern about a possible trade war with China if President Donald Trump wins re-election.

The funds also bailed out of most of their long position they held at the beginning of the year.