By Keith Brown, DTN Contributing Cotton Analyst 

The cotton market was sharply lower Tuesday, albeit on muted volume. It fell in sympathy with other markets. The energies posted another round of negative prices, as crude fell over $4 per barrel. Gold and silver were also lower. The decline was prompted by the continued rise in the U.S. dollar, Europe’s third wave of COVID-19 and reports that the Democrats are readying a new major tax bill.

May cotton posted its lowest close since Feb. 1. Old crop’s bullish fundamentals of reduced carryout and even stronger export-sales are being tainted by the growing negativity of the U.S. dollar and the combative meeting between the Biden administration and China

The market is anticipating this Thursday’s export-sales as a means to stem its bearish flow. However, last week saw combined sales of 581,000 bales and yet the needle hardly moved. Of course, next week the market will see the 2021 planting intentions from USDA.

Fed chair Jerome Powell told congress Tuesday that any serious inflation seen in 2021 will be a “one-off event.” Moreover, he added that the Fed has the tools to keep the inflation rate about the 2% mark. Of course, one of the underlying drivers for higher commodities prices was the fear of growing and rampant inflation.

Tuesday, May cotton closed at 83.53 cents, down 1.09 cent, July settled at 84.60 cents, down 1.01 cents and December ended at 81.32 cents, down 0.82 cent; estimated volume was 19,277 contracts.