Cut expected in U.S. ending stocks to 5.6 million bales. World ending cotton stocks outside China projected to grow more than 2.4 million metric tons (11.02 million bales), Cotton Outlook says. Constructive weekly export sales expected.

Cotton futures settled higher on heavy volume Wednesday, led by a moderate gain in December as it recaptured most of what it lost the prior session.

December closed up 56 points to 68.63 cents, just above the midpoint of its 109-point range from down a point at 68.06 to up 108 points at 69.15 cents. It ticked up to a last print at 68.80 cents, up 73 points. March settled up 40 points to 68.86 cents, trading within a 96-point range from 68.36 to 69.32 cents.

Traders tweaked positions ahead of twin USDA reports scheduled Thursday: The U.S. weekly export sales-shipments data due at 7:30 a.m. CST and the monthly supply-demand updates at 11 a.m. CST.

Volume climbed to an estimated 73,007 lots from 66,294 lots the previous session when spreads accounted for 47,153 lots or 71%, EFS 131 lots and EFP 100 lots. Options volume dipped to 2,858 lots (1,241 calls and 1,617 puts) from 4,576 lots (1,868 calls and 2,708 puts).

To review, USDA is expected to trim its U.S. all-cotton production estimate to around 20.9 million bales from 21.12 million foreseen last month. Guesstimates range from 20.1 million to 21.5 million, up from last year’s 17.17 million bales.

Ending stocks are projected around 5.6 million bales, down from USDA’s October forecast of 5.8 million but up from last season’s three-year low of 2.75 million bales and still the largest since 2008-09.

Globally, ending stocks are expected to slip to around 91.6 million bales from 92.38 million foreseen by USDA last month but up from last season’s 89.57 million bales. Estimates ranged down to 89 million bales.

In a monthly review, Cotton Outlook said an addition to global stock levels of over 840,000 metric tons (3.86 million 480-pound bales) appears in prospect at the end of 2017-18. That compares with an increase of 2.81 million bales projected by USDA.

However, as has been the case for some time, a reduction in stocks in China of almost 1.6 million tons (7.35 million bales) disguises the situation in the rest of the world where an addition of more than 2.4 million tons (11.02 million bales) is foreseen, Cotton Outlook said. That compares with an increase forecast by USDA of 11.76 million bales to a record high rest-of-world carryover of 53 million bales.

Expectations generally are for another round of constructive U.S. export sales for the week ended Nov. 2. Closing prices that week ranged from 68.20 to 69.08 cents, basis December, within a tight 150-point band from 67.80 to 69.30 cents.

Net upland sales the prior reporting week totaled 209,500 running bales and have averaged 226,600 RB per week the last four weeks, well above the pace needed to achieve the USDA’s 2017-18 projection of 14.5 million statistical 480-pound bales.

However, upland shipments have continued to lag the pace required to reach the forecast, declining during the week ended Oct. 26 to the second lowest of the marketing year at 86,800 RB. Upland shipments the last four weeks have averaged 96,400 RB.

Futures open interest fell 1,051 lots to 235,937 on Tuesday, with December’s down 8,478 lots to 84,588 and March’s up 5,803 lots to 104,326. December options expire Friday and first notice day then will be nine trading sessions ahead.

Certified stocks grew 5,000 bales to 39,322, up from the low of 1,711 bales reported last Thursday and the largest since 42,307 bales on July 24. The high for the calendar year was 490,897 bales reported on June 23.