U.S. ending stocks expected to drop 350,000 bales to 5.15 million as exports rise. U.S.-China trade dispute viewed as unlikely to curb robust export demand. Slight decline projected in the world carryout. India’s 2017-18 production estimated up about 400,000 bales by FAS post.

Cotton futures settled higher Monday but well off the highs of triple-digit gains posted in nearby deliveries in the early going.

Spot May gained 37 points to close at 82.91 cents, in the lower quarter of its 99-point range from up 115 points at 83.69 cents to up 16 points at 82.70 points. It touched a new high since March 21, lost momentum and fell to the session low, then bounced to finish in the lower quarter of the range.

July settled up 58 points to 82.76 cents, in the lower half of its 95-point range from 82.39 to 83.34 cents. December closed up 23 points to 78.17 cents, six ticks off the high of its tight 35-point range.

A boost in stocks in deliverable position may have contributed to the narrowing of May’s premium over July as the index fund rolling of longs from the front contract continued.

Volume increased to an estimated 68,200 lots from 59,788 lots the previous session when spreads accounted for 38,969 lots or 65%, EFS 758 lots and EFP 39 lots. Options volume slipped 7,012 lots (5,282 calls and 1,730 puts) from 9,442 lots (5,717 calls and 3,725 puts).

Traders tweaked positions ahead of the USDA supply-demand report on Tuesday. A 350,000-bale reduction in U.S. ending stocks to 5.15 million is expected on average from the March forecast, still up from 2.75 million bales last season.

The export forecast is expected to rise by a similar amount from 14.8 million bales, while most analysts expect little change in the U.S. production estimate ahead of next month’s final crop revisions and annual ginning summary. Export guesstimates have spanned a wide range.

Many analysts and traders doubt that the U.S.-China trade dispute will curb robust export demand for U.S. cotton this season, though some worry that an actual trade war longer-term might push the global economy into a recession.

John Robinson, Texas Agri-Life Extension Service cotton marketing specialist, said in a weekly report that trader sentiment may be discounting the threat of tariffs as geo-political posturing prior to lager bilateral trade negotiations.

“And even if China imposed a tariff on U.S. cotton, I would not necessarily expect a long-term disruption to U.S. exports, since the flows of U.S. cotton to yarn exporting countries like Vietnam, Bangladesh, Indonesia, Pakistan and even India might increase,” he said.

World ending stocks are expected on average to decline 600,000 bales to 88.25 million, up slightly from currently estimated beginning stocks of 87.7 million but still one of the lowest of the last six years.

Production in India, the world’s largest cotton producer, is estimated by the U.S. agricultural attach there at 28.93 million 480-pound bales, up from USDA’s official 2017-18 forecast of 28.5 million.

The Foreign Agricultural Service report said farm-gate prices remain high and should encourage more cotton coming to market or going straight to mills. The pace of reported arrivals remains ahead of last year, the FAS post said, adding that trade sources indicate cotton arrival estimates 10% to 15% above official Cotton Corp. of India estimates.

India’s ending stocks, widely debated among world cotton watchers, are projected at 13.06 million bales by the FAS post, up from 12.63 million foreseen by USDA and 11.13 million last season.

Certified stocks grew 14,547 bales to 82,337 on Friday, the daily exchange report showed Monday. There were 14,547 newly certified bales, including 10,274 bales at Dallas-Fort Worth and 4,273 bales at Memphis. Seven bales were decertified at Memphis.

Futures open interest increased 2,610 lots, with May’s down 5,396 lots to 86,642, July’s up 4,763 lots to 88,201 and December’s up 3,197 lots to 80,952.