World ending stocks expected to decline a second year in 2016-17 as production increases on higher yields but falls 4.3 million bales below mill use, ICAC estimates indicate. World price projection increased.

Cotton futures eked out small closing gains on light volume Wednesday, with December chopping on both sides of unchanged and completing an inside day within the prior-session trading range.

December edged up nine points to close at 65.30 cents, in the upper third of its 104-point range from up 38 points at 65.59 to down 66 points at 64.55 cents. March closed up eight points at 65.52 cents.

Volume slowed to an estimated 14,088 lots from 26,853 lots the previous session when spreads accounted for 3,148 lots or 12% and EFP 341 lots. Options volume totaled 1,910 calls and 1,689 puts.

World ending stocks in 2016-17 are expected to decline for a second consecutive year, dropping 3.5% to 19.66 million metric tons as mill use again exceeds production, according to the latest estimates of the International Cotton Advisory Committee.

Converted to 480-pound statistical bales, the ICAC projected a 2016-17 global carryout of 90.3 million, down from 93.6 million in 2015-16.

While the world cotton area is expected to contract by 1% to 31 million hectares or 76.6 million acres in 2016-17, average yields are projected to increase by 5% to raise production to 104.4 million bales from 99.9 million, which was the lowest output since 2003-04.

Cotton area in India, the worldΆs largest producer, is expected to expand by 1% to 12 million hectares or 29.65 million acres and production to increase by 8% to 28.9 million bales. Better monsoon weather may boost yields, though pest pressure remains a concern.

Amid low prices for competing fibers, world cotton consumption is forecast virtually unchanged at 108.7 million bales. This would exceed production by 4.3 million bales, compared to 8.8 million bales in 2015-16.

Mill use in China, the worldΆs largest cotton consumer, is projected to decline by 5% to 31.2 million bales, with increases foreseen in such countries as Vietnam, Bangladesh, India and Pakistan.

Despite stagnant mill use, world cotton trade may increase by 1% to 34.17 million bales from 33.71 million. ChinaΆs imports are expected to decrease by 8% to 4.3 million bales as Beijing continues to restrict imports to reduce its sizable cotton stocks.

However, imports outside China are forecast to increase by 3% to 29.85 million bales. With larger exportable supplies, U.S. exports are forecast by USDA to rise by 17% to 10.5 million.

The ICAC raised its projection of 2016-17 world average prices as measured by the Cotlook A Index to 72 cents from 70 cents foreseen a month ago. The forecast compares with 70 cents estimated for this season and 71 cents in 2014-15.

Futures open interest declined 531 lots Tuesday to 183,962, with DecemberΆs down 941 lots to 149,487 and MarchΆs up 442 lots to 22,278. Stocks in deliverable position remained at 135,163 bales.