December posted weekly gain. U.S. crop estimate came in lower than expected and world carryout projected at a new record high.

Cotton futures settled mixed Friday after digesting USDA supply-demand estimates featuring a smaller-than-expected U.S. crop and another new all-time high in the world carryout.

December settled up 12 points to 76.88 cents, in the middle of its 203-point range from down 91 points at 75.85 to up 112 points at 77.88 cents. It stayed within the dayΆs range established prior to release of the USDA reports and posted a 30-point gain for the week to complete a weekly reversal and snap a string of four weekly losses.

March closed down 22 points to 78.64 cents, also around the midpoint of its 152-point range from 77.84 to 79.36 cents. It eased six ticks for the week.
Volume increased to an estimated 41,800 lots from 32,390 bales the previous session when spreads totaled 20,820 lots or 64%, EFS 1,500 lots and EFP 41 lots. Options volume as December options expired rose to 3,203 calls and 3,185 puts.

U.S. cotton production prospects rose by 211,000 bales from September to 13.11 million this month, USDA reported, while total market offtake gained 100,000 bales to 14 million. Ending stocks edged up 100,000 bales to 3 million, equivalent to 21% of total use.

The domestic mill use estimate was raised 100,000 bales to 3.6 million, based on strong early season activity, and exports were left unchanged at 10.4 million bales.

Analysts on average had expected a crop of 13.3 million bales, exports of 10.4 million and ending stocks of 3.2 million.

Regionally, upland production estimates rose by 101,000 bales to 4.615 million in the Southeast and 200,000 bales to 2.665 million in the Delta, partly offset by declines of 75,000 bales to 4.334 million in the Southwest and 20,000 bales to 865,000 in the West.

Upland production nationally gained 206,000 bales to 12.479 million and Pima prospects held steady at 626,000 bales for an all-cotton output of 13.105 million bales, down 24% from last seasonΆs 17.315 million.

Globally, USDA raised beginning stocks 2.02 million bales or nearly 16% to 88.06 million, cut production 200,000 bales to 117.22 million, hiked consumption 100,000 bales to 109.63 million and boosted ending stocks 980,000 bales or about 1% to a new all-time high of 95.71 million.

Stocks were raised mainly in India where revisions were made to estimates of production and loss from 2006-07 to bring historical stocks to levels which cover reported demand, USDA said.

Production forecasts were lowered for China and Zambia but raised for the United States, Brazil and Greece. Consumption was raised for Vietnam and the United States but lowered for Egypt.

A decrease to 32.5 million bales in ChinaΆs crop resulted in a corresponding 500,000-bale cut in ending stocks there to 57.81 million, 60% of the world carryout.

The steady consumption and import estimates for China reflect announced policies for the acquisition and release of government reserves, which are unchanged from September, USDA said.

Futures open interest fell 763 lots Thursday to 195,245, with DecemberΆs down 4,246 lots to 81,969 and MarchΆs up 2,209 lots to 82,773 to take over the lead for the first time.

Certificated stocks fell 3,016 bales to 172,734, the first decline after growing rapidly from 11,909 bales on Oct. 4. There were 2,149 newly certified bales and decertification of 5,165 bales. Awaiting review were 44,970 bales.

World values as measured by the Cotlook A Index fell 25 points Friday morning to 85.05 cents. The premium to ThursdayΆs December futures settlement widened six points to 8.29 cents. For the week, the index gained 15 points.