Suspected profit-taking pulled the market off new three-month highs. Sizable batch of unpriced mill on-call sales reported in unshipped export commitments. Red flag warning issued on Texas High Plains.

Cotton futures settled lower Tuesday, reversing off new three-month highs amid suspected profit-taking following a four-day rally.

Most-active March closed down 71 points to 70.14 cents, in the lower half of its 181-point range from up 49 points at 71.34 to down 132 points at 69.53 cents. It climbed to a new intraday high since Sept. 12, fell to within 12 ticks of the prior-day low and pared the setback.

December, facing first notice day on Friday, lost 47 points to settle at 70.90 cents, trading within a 212-point range from 72.52 to 70.40 cents. The other months settled down 39 to 65 points in traded contracts.

Volume was estimated at 53,607 lots, near the 53,768 lots the prior session when spreads accounted for 25,307 lots or 47% and EFP 692 lots. Options volume rose to 10,046 lots (6,969 calls and 3,077 puts) from 7,243 lots (5,452 calls and 1,791 puts).

Bullish technical price action, heavy unpriced mill on-call sales — including a large volume in December — and strong demand illustrated by last week’s report of the largest U.S. weekly export sales since January 2015 spurred the rally.

The rally stirred concerns about the possibility of sales cancellations if prices continued to move higher, with a sizable batch of the unfixed call sales resting in unshipped export commitments.

Quality issues in some U.S. and foreign supplies and talk of lower-than-expected yields in parts of the U.S. belt have drawn attention. Leaf grades have averaged a higher-than-usual 4 in Delta cotton classed at Dumas and Memphis and micronaire has averaged in the discount area of 3.3 at Lubbock.

Slow shipments to overseas customers — about 17% below a year ago — have been blamed partly on quality issues, but the pace of sales — up 39% from last year — nevertheless has produced expectations in some quarters that USDA likely is going to be compelled to raise its export estimate.

On the weather scene, a red flag warning has been issued for Tuesday afternoon for much of the Texas High Plains and areas of the adjoining Rolling Plains.

Gusty north winds of 25 to 30 miles per hour and dry air with humidity of 10% to 20% were expected to produce critical fire weather conditions. Outdoor burning and activities involving sparks or open flames were highly discouraged.

Dry weather and temperatures mostly above normal forecast for the remainder of the next week to 10 days are expected to favor increased cotton harvesting.

Elsewhere, ginning continued uninterrupted on large backlogs of modules on gin yards in the North Delta last week and progressed slowly in the South Delta because of a lack of workers, reports indicated.

Sporadic showers delayed harvesting in some late-planted fields and producers were concerned about the effects on cotton still in the fields. Regrowth was observed on defoliated cotton in a few unharvested fields in Arkansas and Mississippi. Yields were reported ranging from 900 to 1,400 pounds in the North Delta and 900 to 1,300 pounds in the South Delta.

Futures open interest expanded 3,934 lots to 227,888 on Monday’s rally, with December’s down 4,598 lots to 7,894 and March’s up 6,602 lots to 154,679. Certified stocks were unchanged at 47,951 bales.