By Keith Brown DTN Cotton Correspondent
Cotton took it on its proverbial chin Tuesday as the futures closed double-digit lower. USDA’s crop report was deemed bearish, even as the market entered the day in an overbought technical state. Essentially, the government lowered domestic consumption 100,000 bales, which in turn jumped ending stocks from 4.3 million bushels (mb) to 4.4mb.
In the world numbers, USDA raised China’s production 250,000 bales, while lowering Turkey’s usage some 300,000 bales. Bottom line, global stock increased some 350,000 bales swelling carryout from 76.09 million to 76.44 million.
Technically, the market was overbought, having bottomed about Valentine’s Day, and subsequently rallied nearly 5.25 cents points with little correction. Of course, fundamentally helping that rally along was the cold and wet field conditions of calendar March, plus the less-than-expected planting intentions data of March 30.
Other negatives Tuesday were Mr. Trump’s threat of European tariffs and a declining Dow Jones. The cotton market can get back on track if this Thursday’s weekly sales and exports are demonstratively positive. Last week, shipments tallied some 400,000 bales, while combined crop year sales went over 475,000 bales. China was a net buyer in both crop seasons.
Tuesday, May cotton closed at 78.09 cents, down 0.83 cent, July finished at 78.47 cents, down 0.53 cent and December settled at 76.89 cents, off 0.27 cent. Tuesday’s estimated volume was 68,300 contracts.