U.S. export commitments rose to 7.161 million running bales, 78% of the USDA forecast. Widened world production shortfall may have been supportive. India reduced seed royalty fees.

Cotton futures rallied from a six-session low in spot May to finish modestly ahead on a late surge above the prior-day high Thursday.

• May led the rally, settling up 24 points to 56.83 cents, in the upper quarter of its 133-point range from down 93 points at 55.66 cents to up 40 points at 56.99 cents. It closed back above its nine-day moving average.
• July closed up 19 points to 56.77 cents and December finished up 11 points to 56.70 cents. A decline in the U.S. dollar index against a basket of currencies may have helped to fuel the rally.
• Volume quickened to an estimated 35,170 lots from 27,533 lots the previous session when spreads accounted for 12,991 lots or 47% and EFP 100 lots. Options volume totaled 5,024 calls and 2,850 puts.

Net U.S. all-cotton export sales for shipment this season of 200,000 running bales during the week ended March 3, up from 189,500 RB the previous week, boosted 2015-16 commitments to 7.161 million RB.

Commitments narrowed the lag behind year-ago bookings by 148,000 RB to 2.511 million RB or to 26% and reached 78% of the USDA export forecast. A year ago, commitments were 89% of final shipments.

All-cotton shipments hit a marketing year high of 262,500 RB, raising the total for the season to 4.127 million RB, topping the pace needed to reach the USDA estimate even as the lag behind year-ago shipments widened by 58,000 RB to 911,000 RB or to 18%.

Shipments of upland and Pima combined were 45% of the USDA projection, compared with 46% of final 2014-15 exports a year ago.

To achieve the USDA forecast, all-cotton shipments need to average roughly 242,300 RB per week, while weekly sales averaging around 97,800 RB would match the export estimate.

The market may have garnered some retrospective support from a further widening of the world production shortfall, the first since 2009-10, projected in Wednesday’s USDA supply-demand report.

The margin by which world production is expected to fall shy of consumption is forecast to widen by 770,000 bales from the gap foreseen a month ago to 8.99 million.

Meanwhile, reports that India has cut the royalty fees for MonsantoΆs genetically modified cottonseeds by nearly 70%, ignoring a threat by the worldΆs biggest seed company to leave if it did, has stirred conjecture over longer-range implications of the potential impact on production.

The action followed a recommendation from a panel appointed by IndiaΆs Ministry of Agriculture to look into disputes about fees charged licensees by a joint venture owned by Monsanto and Indian seed developer Mahyco. Monsanto has said it would continue a legal challenge.

Genetically modified varieties have helped to transform India into the worldΆs largest cotton producer and second largest cotton exporter.

Futures open interest grew 3,014 lots Wednesday to 211,526, with MayΆs up 822 lots to 121,764 and JulyΆs up 1,053 lots to 44,784. Cert stocks fell 4,908 bales to 67,014.