Weekly export sales report set for release on Friday. Ability of USDA to resolve stocks discrepancy is limited.

Cotton futures followed a path of least resistance to settle at a new low for the move Thursday ahead of a weekly export sales report.

Benchmark December settled down 45 points to 82.30 cents, in the lower quarter of its 84-point range from up 20 points at 82.95 to down 64 points at 82.11 cents. It posted a new intraday low since June 3 and a new low close since May 31. October and March both slipped 43 points to settle at 82.40 cents and 81.89 cents, respectively.

Dollar index strength against a basket of currencies along with weak technical considerations and ongoing uncertainty about demand from China weighed on cotton sentiment, analysts said.

Volume increased to an estimated 15,100 lots from 11,012 lots the previous session when spreads totaled 3,284 lots or 30%, EFP 81 lots and EFS 46 lots. Options volume totaled 3,085 calls and 6,561 puts.

U.S. export sales to be reported Friday for the week ended Aug. 29 are expected by some traders to be little changed to slightly higher, depending upon what happens with cancellations.

December futures that week ranged from a high of 85.23 to a low of 83.22 cents and settlements from 84.90 to 83.24 cents.

Net all-cotton sales during the previous reporting week were 79,000 running bales, with upland sales at 68,800 bales as gross sales rose to 120,100 bales but cancellations climbed to 51,300 bales.

Meanwhile, traders will have one eye on next weekΆs supply-demand report on any further adjustments in the U.S. balance sheet for the 2012-13 marketing year ended July 31.

U.S. exports for last season were reduced in the August report based on weekly shipment data reported by the Foreign Agricultural Service. Exports were lowered 200,000 bales to 13.1 million after shipments tailed off in July.

Since the loss in 2011 of the Census Bureau stock survey, data from the Farm Service Agency have been used to help reconcile end-of-year stocks. For 2012-13, the data suggested that stocks were lower than the calculation of supply minus use would indicate.

As a result, the 2012-13 balance sheet estimates last month included a loss of 325,000 bales to account for part of the difference. Analysts said USDA would continue to review 2012-13 supply-demand estimates, collect additional stocks data and may make further revisions.

However, USDAΆs ability to resolve the stocks discrepancy is limited by the lack of a comprehensive industry stocks survey.

With forecasts of U.S. cotton demand exceeding production for the first time in three seasons, ending stocks are projected to decrease a million bales in 2013-14 to 2.8 million, lowest since 2010-11.

Futures open interest dipped 575 lots Wednesday, the 11th decline in a row, with DecemberΆs down 928 lots to 124,361 and MarchΆs up 267 lots to 36,669. Certificated stocks grew 1,458 bales to 18,229 on 2,059 newly certified bales at Greenville, S.C., and decertification of 601 bales.

The Cotlook A Index of world values was flat Thursday morning at 88.75 cents. The premium to WednesdayΆs December futures settlement narrowed four points to 6 cents.