By Keith Brown, DTN Contributing Cotton Analyst 

A highly nervous, speculative community elected to book profits, as well as lighten their bullish load Wednesday. Those traders were also spooked by the decline in soybeans and corn. Earlier Wednesday, rumors swirled that Russia and Ukraine were set for another round of negotiations, but this time China wanted to play a role. Thus, at midweek, long liquidation across many markets unfolded, killing prices lower.

Thursday morning, USDA will present its weekly export-sales. Besides the obvious, traders want to see strong numbers to dispel some of the demand-destruction fears that have been building. Last week saw combined seasonal sales of 650,000 bales, and a marketing-year high amount in shipments.

In his mandatory report to Congress, Fed Chairman Jerome Powell said Wednesday that he still sees interest rate hikes ahead, though he noted the implications for the U.S. economy are highly uncertain from the Ukraine war. Powell indicated the labor market was extremely tight and said inflation has risen well above the Fed’s 2% target. Thus far, between anticipating higher rates, and safe-haven buying from investors, the U.S. dollar is at a one-year high.

Wednesday, March cotton settled at 122.04 cents, down 4.31 cents, July ended at 115.08 cents, down 4.14 cents and December finished at 100.81 cents, 2.22 cents lower; estimated volume was 29,982 contracts.