U.S. all-cotton production in 2017-18 projected down 140,000 bales from USDA’s latest estimate and exports up 390,000 bales ahead of the monthly supply-demand reports. Turkey could impose duties on cotton in retaliation to U.S. tariffs.

Cotton futures settled sharply lower in the front four contract months on heavy volume and wild price swings Tuesday, giving back of most of the prior day’s big rally. The other contracts ended on slight gains.

May lost the most, reversing off its new contract high to close down 280 points at 82.43 cents, in the lower quarter of its 489-point range from up 137 points to a new contract high at 86.60 cents to down 352 points at 81.71 cents. It plunged through a gap left Monday from 82.22 to 82.24 but closed above it.

July finished down 249 points to 82.49 cents, trading within a 385-point range, while December eked up three points to settle at 77.98 cents. July and December posted new contract highs at 85.83 and 78.45 cents, respectively. Maturing March traded within a 254-point range from 87.75 to 85.21 cents and settled down 157 points at 83.84 cents.

Volume surged to an estimated 69,800 lots from 44,374 lots the previous session when spreads accounted for 17,579 lots or 40%, EFP 170 lots and EFS 33 lots. Options volume jumped to 24,147 lots (17,944 calls and 6,203 puts) from 9,809 lots (5,389 calls and 4,420 puts).

Looking ahead, U.S. 2017-18 all-cotton production on average is projected down 140,000 bales from USDA’s last estimate to 21.12 million ahead of the monthly supply-demand reports, up from last season’s 17.17 million bales.

The USDA estimates are scheduled for release on Thursday along with end-of-season figures on ginning and an estimate of cotton still to be processed. The crop in some areas of the Southwest exceeded gin capacity and prolonged the ginning season.

Exports on average are expected to rise 390,000 bales to 14.89 million, just below last season’s second highest on record of 14.92 million bales. The all-time high is 17.67 million bales in 2005-06 when production was a record 23.89 million bales.

Ending stocks are forecast at an average of 5.48 million bales, down from 6 million foreseen by USDA last month but up from last season’s 2.75 million. Domestic mill use wasn’t tallied. It was projected last by USDA at 3.35 million bales, up from 3.25 million last year.

Globally, ending stocks are expected to decline 730,000 bales to 87.82 million following USDA’s February increase of 760,000 bales. The guesstimate is slightly above beginning stocks of 87.66 million bales.

On the international scene, Turkey could retaliate against U.S. steel tariffs by hiking duties on imports of U.S. cotton, Reuters reported, quoting one of President Tayyip Erdogan’s economic advisers.

“Starting with Turkey, countries affected by the U.S. tax imposition are preparing to answer the U.S. in alternative goods — such as Turkey in cotton,” Cemil Ertem, a prominent Erdogan adviser, wrote in a newspaper.

The Economy Ministry said it had spoken to European Union Trade Commissioner Cecilia Malstrom regarding the issue and there was agreement to cooperate on the issue in the World Trade Organization. Turkey is the world’s eighth-largest steel producer and sixth-largest exporter to the United States.

As of Feb. 15, Turkey ranked as the third largest export customer for U.S. cotton this season on purchases of 1.428 million statistical bales. China was the largest, having bought 2.33 million bales, and Vietnam ranked second on purchases of 2.216 million bales.

The United States is the world’s largest cotton exporter. Exports this season are projected at 81% of the total market offtake of U.S. cotton in USDA’s latest estimates.

Futures open interest expanded 5,294 lots to 271,414 on Monday’s explosive rally, with March’s down 52 lots to 21 and May’s up 3,110 lots to 133,921. Certified stocks were unchanged at 102,423 bales.