Keith Brown DTN Contributing Cotton Analyst    

The cotton market was limit-down Tuesday based on global demand fears. Between the Chinese COVID-19 lockdowns and seeing USDA hike global stocks some 1.50 million bales, the market seemingly had nowhere to go but down.    

Specific to the supply-demand update, USDA whacked the U.S. 2022 crop some 1 million bales to 15.50, but also lowered exports by 500,000 bales. The result was domestic carryout fell from 2.90 million to 2.40 million. However, world carry jumped some 1.5 million bales on lower Chinese and Indian consumption.    

The U.S. Dollar Index was markedly higher Tuesday as traders anticipate a bullish CPI number Wednesday. Last month inflation was pegged at 8.6%, but there is the possibility it will jump to 9%. That would encourage the Fed to become very aggressive in raising rates.    

According to China's agricultural ministry, it has reduced its cotton import estimate for 2021-22 to 1.75 million metric tons, a 250,000-ton cut. The action was taken due to higher world prices the ministry indicated. China may be setting the stage for cancellations of some US cotton contracts.    

For Tuesday, December closed at 90.84 cents, down 4.00 cents, March 2023 finished at 86.68 cents, down 4.00 cents and July 2023 settled at 82.50 cents, off 4.00 cents; estimated volume was 25,949 contracts.    

Keith Brown can be reached at commodityconsults@gmail.com 

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