The cotton market recovered from USDA’s less-than-positive crop report numbers to close slightly higher. The agency raised the 2018 crop some 180,000 bales. The 2018 crop now stands at 18.60 million bales from November’s 18.40 million. The government said the increase in production was from the Texas crop. As we predicted, however, USDA left the exports category unchanged at 15.00 million bales.

We contend this was done as a result of the on-going U.S. and China trade talks. Nonetheless, domestic ending stocks jumped 100,000 bales, from 4.30 million to 4.40 million bales. The initial reaction of the futures was to break nearly 60-plus points, but by session’s end the market had returned to near unchanged to better levels.

In the world data, USDA cut production in India 500k bales, China 500k, Pakistan 600k and Turkey 200k bales. However, also in the world numbers, USDA increased beginning stocks 60k bales, cut Consumption 200k, made some other tweaks to increase current carryout to 73.19 million bales, an increase of 580k bales.

This Thursday USDA will report on weekly sales and shipments. As much as the market would like to have China as a buyer in the 2018-19 crop, we do not see that business occurring till January. In fact, China was a net canceler of 30k bales last week. March cotton settled 80.02 cents, up 0.14 cent, July finished 81.72 cents, up 0.26 cent and December 2019 was 77.82 cents, up 0.19 cent. Tuesday’s estimated volume was 25,100 bales.