Ongoing fear that ChinaΆs enormous cotton reserves eliminate any hope of a strong market continues to be a wet blanket over any rally attempts. Today was no exception. IΆm repeating the weekly chart I ran Friday because nothingΆs changed and todayΆs lower closes raise new risk we might break that uptrend line.

The only real “news” of significance during trading hours were reports that China bought only 269,450 tonnes of domestic cotton from farmers to add to its reserves, just 44% of its “targeted” volume. That, to me is potentially constructive because with the government offering 75% over world prices, why in the world wouldnΆt Chinese farmers be selling unless 1) This yearΆs crop just canΆt meet the new more stringent quality standards for government purchase or 2) the crop was considerably smaller than we think.

Unfortunately, the global fundamentals are simply so overwhelmingly bearish (if you count ChinaΆs enormous reserves as part of projected global ending stocks) that I cannot see rally potential much beyond 82 at best. And the best hope for getting even that high again lies with growing trade suspicions that we could see another drop in cotton acreage in the U.S. next year. ItΆs a minority view, with one widely-watched Doane competitor out with a forecast for cotton acreage to RISE by about 600,000 acres in 2014. For my part, I expect cotton acreage to decline by at least 100,000 acres.

NO CHANGE IN ADVICE. My view is that the worse this market gets from here, the bigger decline weΆll see in cotton acreage in 2014, possibly even worldwide.