Traders looked ahead to U.S. weekly export sales-shipments data. U.S. cotton ranked as ChinaΆs largest import supplier last month.

Cotton futures settled mixed Wednesday with spot July reversing from a new intraday high since May 5 to give back a small portion of the previous sessionΆs triple-digit closing gain.

July settled down 11 points to 62.90 cents, in the middle of its 105-point range from up 41 points at 63.42 cents to down 64 points at 62.37 cents. December closed up nine points to 62.54 cents, in the upper quarter of its tight 59-point range from 62.67 cents to 62.08 cents.

Volume slowed to an estimated 22,029 lots from 39,150 lots the previous session when spreads accounted for 15,205 lots or 39% and EFS 55 lots. Options volume totaled 6,026 calls and 2,456 puts.

Traders looked ahead to the U.S. export sales-shipments report from USDA at 7:30 a.m. CDT on Thursday for the week ended May 19.

Closing prices in the July contract during that reporting week ranged from 60.62 cents to 62.20 cents, with the intraday trading band spanning 263 points from 60.25 cents to 62.88 cents.

Net upland sales the previous reporting week for shipment this season rose to a six-week high to 189,385 running bales and have averaged 100,700 RB the last four weeks. Upland shipments for the week were 232,931 RB, about even with the four-week average of 231,500 RB.

China bought 28,900 RB that week, third largest of sales to 17 countries, and purchased 99,700 statistical bales of U.S. cotton during April, its largest import supplier for the month. Its total April imports of 320,420 SB were down 57% from a year earlier. The imports now are expected to concentrate on the higher qualities.

The purchases by China last month preceded the onset of sales from its government-owned stockpile on May 3. The reserves sales were reported to have totaled 1.87 million bales as of Friday.

Continued strong sales through the auction period, scheduled to go through August and end prior to the new-crop harvest, would result in the largest decline in ChinaΆs reserves since 2002-03, according to USDA.

ChinaΆs cotton import quota now is more limited than it has been for more than a decade, and prices for reserve sales now are determined partly by world price levels.

Cotton import constraints have increased the textile industryΆs need for additional sources of fiber, and more competitive pricing has resulted in much larger cotton purchases than in previous auctions last summer.

China acquired unprecedented levels of government stocks over 2011-12 to 2013-14 as it supported its domestic cotton price 40% to 50% above world prices. Imported cotton also was incorporated into the reserves and dominated the early rounds of the sales.

The reserve sales price is determined by a combination of the world price (adjusted for import taxes, including a 1% tariff and a 13% value-added tax) and domestic market prices.

One result, USDA says, is that domestically produced cotton has been sold this month at prices about 40% less than the reserve purchase prices that prevailed during the years the cotton was acquired.

The combination of discounts to the initial purchase price and years of storage costs will result in large losses to the government.

Futures open interest expanded 3,575 lots Tuesday to 193,936, with JulyΆs down 263 lots to 96,796 and DecemberΆs up 3,405 lots to 80,031. Cert stocks grew 698 bales to 92,257. Awaiting review were 6,791 bales.