U.S. export forecast reduced, based on lagging shipments and expectations for the second half of the marketing year. Only small changes made in the global balance sheet.

Cotton futures settled higher on huge volume Thursday as traders digested monthly USDA supply-demand estimates showing slightly lower U.S. exports, resulting in a higher carryover, and a modest increase in world ending stocks.

Spot March led the gains, settling up 66 points to 76.62 cents, just below the midpoint of its 163-point range from down seven points at 75.89 cents to up 156 points to a three-session high at 77.52 cents. It touched the high on the heels of strong U.S. weekly export sales data and a crop year high in shipments.

May closed up 27 points to 77.56 cents and July finished up 19 points to 78.50 cents. The other contracts settled down nine to up 20 points, with December up 14 points to 75.17 cents.

Volume reached an estimated 101,600 lots, up from 80,961 lots the prior session when spreads accounted for 62,201 lots or 77%, EFS 1,267 lots and EFP 204 lots. Options volume rose to 9,552 lots (5,109 calls and 4,443 puts) from 6,527 lots (3,511 calls and 3,016 puts).

The USDA shaved its 2017-18 export forecast 300,000 bales from a month ago to 14.5 million, based on lagging shipments thus far, and boosted ending stocks a corresponding amount to 6 million bales.

Slightly higher exports and a modest reduction in the carryout had been expected. Production and domestic mill use estimates were unchanged, as expected, at 21.26 million and 3.5 million bales, respectively.

The ending stocks forecast now is the equivalent of 33.6% of total market offtake, up from 31.4% foreseen last month and 15.1% last year. If realized, that would be the highest stocks-to-use ratio since 2008-09 when it was 37.7%.

The marketing year average price received by producers is projected to range between 67 and 71 cents per pound, unchanged from January.

To meet the revised export forecast, shipments still will have to average more than 350,000 bales per week, a rate just over last year’s then-second-highest level on record, USDA said. Shipments have lagged during the first half of the marketing year.

Accumulated shipments as of the last week of January totaled 4.57 million running bales, just 32.5% of the new forecast. That was the second lowest in the last decade and below the 38% decadal average.

The only lower year, 2014-15, saw U.S. February-July exports supported by a very small crop in Australia owing to drought and India’s large minimum-support-price operations, which reduced its exports. Both those limited competition with — and helped accelerate — U.S. exports.

But no such favorable factors are evident so far this season to support second-half exports, USDA said.

Additionally, Australia, a major exporter, is expected to produce its largest crop in six years and the harvest appears to have begun earlier than usual. And a doubling of the crop in Mexico, a major U.S. cotton importer, may curtail its second half of the season imports.

Another factor is that implementation of new U.S. trucking regulations reportedly has caused delays in transporting cotton from U.S. warehouses, a situation which USDA says may not be entirely resolved and backlogs cleared before the end of the season.

Ironically, the cut in the export projection came on the heels of back-to-back weeks of marketing high shipments totaling 771,200 RB.

Back to the crop, U.S. all-cotton ginned to Feb. 1 totaled 16.889 million RB, up 17.7% from 15.881 million RB a year ago. Upland ginning rose to 18.062 million RB from 15.378 million RB and ginning of Pima increased to 626,500 RB from 502,950 RB.

Globally, USDA made only small changes in the balance sheet. Production rose by 400,000 bales to 121.37 million, mill use dipped 330,000 bales to 120.50 million and ending stocks edged up 760,000 bales to 88.55 million.

Higher crop estimates for China, Brazil and South Africa offset lower expectations for India and Australia. Consumption decreases for India and Thailand offset an increase for Vietnam. A 1.1-million-bale increase in China’s projected ending stocks and the higher U.S. carryover offset declines for India, Australia, Turkmenistan, Tajikistan and Vietnam.

Futures open interest declined 2,662 lots to 290,902 on Wednesday, with March’s down 10,471 lots to 87,094 and up 2,831 lots to 100,823 in May. Certificated stocks grew 770 bales to 76,527. Awaiting review were 1,746 bales at Galveston.