The cotton market was triple-digits lower Thursday after an afternoon tweet from President Trump stated new tariffs on China were forthcoming. After spending most of the day trading lethargically, the tweet encouraged the already record net-short shorts to come in with more selling. The President announced a new 10% incremental duty on all Chinese goods starting September 1. That action sent most U.S. agricultural commodities sharply lower. Additionally, the Dow Jones fell some 500 points off its daily higher and Crude oil dropped over four dollars per barrel.

Cotton posted its second lowest close of the year, with the lowest close occurring on July 18, at 61.71 cents. Obviously, the first day of the new trading month of August is off to a bearish start. From the look of the charts, many traders would think those July lows will be hard-pressed to hold. If the new crop were to close under the 60-cent mark, the psychological damage to the Market would be huge.

The next two fundamental tests for the market will be next Monday’s weekly crop condition report and then USDA monthly supply-demand report on August 12. It is likely the government will increase the 2019 Crop higher than its present read of 22 million bales. If realized, a 22-million-bale or higher crop would be a 14-year high, and would certainly swell ending stocks as well.

Thursday December cotton closed at 62.37 cents, down 1.47 cents, March finished at 63.56 cents, off 1.12 cents and December 2020 ended down 0.33 cent at 65.22 cents. Thursday’s estimated volume was 23,800 contracts traded.