Cotton suffered its first significant loss since early February as we almost hit limit down early in the morning before only closing down 150 points on the day. The market seems to be cooling off and waiting for more information before trying to make another run higher. We did hit 2-year highs on Monday with K'10 almost reaching 85 cents. This also could have uncovered new commercial selling for those planning to deliver cotton to NY against the K'10.

The cotton market is inverted and NY is the only place in the world to find a buyer for U.S. new crop at these levels. We basically triggered the same mechanism which went off in March 2008 and lead to over 1.6 million bales of cotton coming to the board. We might not reach those levels this time, but with 75k awaiting review and 560k already in cert stocks, it is cleat that U.S. merchants have a strong incentive to deliver and this will eventually put a lid on the market and should push prices lower long term.