Oct. 17 (Bloomberg) -- Cotton futures surged to the highest since May after inventories fell to the lowest in at least 10 years in the U.S., the worldΆs biggest exporter.

Stockpiles monitored by ICE Futures U.S. fell to 7,639 bales on Oct. 12, the lowest since at least August 2002. The domestic harvest was 28 percent complete as of Oct. 14, compared with 34 percent a year earlier, the U.S. Department of Agriculture said this week. The cotton contract for December delivery jumped 4 percent, the most in two months.

Inventories “may not get replenished fast enough for the December delivery period” on ICE, Peter Egli, a Chicago-based director of risk management at Plexus Cotton Ltd., said in an e- mail.

Cotton futures for December delivery rose by the exchange limit of 3 cents to settle at 77.86 cents a pound at 2:48 p.m. on ICE in New York, the highest for a most-active contract since May 22. The price climbed for the fourth straight session, the longest rally since mid-July.

About 46 percent of the U.S. crop this year meets the standard for delivery against the ICE contract after hot, dry weather eroded fiber quality, the USDA said last week. ThatΆs below a historical average of 70 percent, according to Egli. In the week ended Oct. 9, speculators had net-short positions, or bets on a price drop, of 6,699 futures and option contracts, government data showed.

“Shorts are nervous and are getting out of positions,” Egli said.

The first-notice date for December futures is Nov. 26, the day for traders to set the stage for physical deliveries. A bale weighs 480 pounds, or 218 kilograms.

The China Cotton Association said this week that imports rose 4 percent in September from a year earlier, citing customs data.

“The high domestic Chinese price has helped imports and international values,” Keith Flury, an analyst at Rabobank International in London, said in an e-mail.