Cotton futures were hammered hard again on Monday. A big down day in the DJIA added to selling pressure as an indicator of weakening demand. But I suspect the bigger factor was late-breaking news midweek last week when Chinese textile execs and mills predicted Beijing officials will likely change their entire approach to price support for cotton farmers. Instead of buying up domestic production and holding it in “reserve” to boost prices, officials plan a program of subsidizing farmers directly when prices fall short of production costs, similar to the target price and deficiency payment concept in U.S. farm policy.

This afternoonΆs weekly crop ratings would seem to be at least a little supportive for futures tomorrow, however. 43% of the crop is rated “good” to “excellent”, up another point from last week, but still 7 pts below a year ago. And perhaps more significantly, despite last weekΆs rains in west Texas, 23% of the cotton crop is now rates “poor” to “very poor”, up 4 pts from last week and well above a year ago when only 16% was rated that poorly.

As for cotton squaring, 23% of the crop has now hit that point. ThatΆs down 6 pts from the 5 yr average and 11 pts below a year ago.