Rainfall chances listed at 70% in the Texas Plains. Exchange reported working on world cotton contract.

Cotton futures posted a bearish outside-range reversal in benchmark December Tuesday, falling from an early upside probe above highs of the previous two sessions to below lows of the prior nine sessions and settling at the lowest close since June 28.

December shed 73 points to close at 84.37 cents, triggering stop-loss selling on the way down and settling in the lower quarter of its 198-point range from up 79 points at 85.89 to down 119 points at 83.91 cents. March lost 100 points to close at 82.80 cents.

Volume increased to an estimated 16,400 lots from only 7,229 lots the previous session when spreads totaled 1,306 lots or 18%. Options volume totaled 3,264 calls and 2,955 puts.

Overnight rainfall in the West Texas Plains was confined mostly to the Rolling Plains east of the Caprock, with skimpy amounts reported at a few spots in the major High Plains cotton area around Lubbock.

But forecasters pegged rain chances in the Lubbock region at 70% this afternoon and tonight, diminishing to 20% Wednesday and Thursday. Rainfall was expected to total 1 to 2 inches, forecasters said, with isolated amounts to 3 to 4 inches termed possible.

Rainfall recorded by the West Texas Mesonet to midnight included broad coverage in the Rolling Plains, topped by such amounts as 1.75 inches at Haskell, 1.28 inches at Memphis, 1.08 at Knox City, 1.07 at Saint Lawrence and 1.47 at Weinert. San Angelo in the Edwards Plateau recorded 1.08 inches and Wall near there received 1.67 inches.

In the July supply-demand report, USDA left its U.S. crop projection unchanged at 13.5 million bales but upped abandonment off the June planted acreage data to 24%, up from 19.3% foreseen off the March intentions a month earlier.

Abandonment in the Southwest was estimated at 40%, up from 32% projected in June, because of continued drought. U.S. acres for harvest at 7.8 million would be the third lowest since 1983, ranking above 7.6 million acres in 2008 and 7.5 million in 2009.

Yields were raised to 831 pounds from 800 pounds projected in June, down from 887 pounds in 2012-13 but up from the five-year average of 817 pounds.
Meanwhile, a world cotton contract is being worked on by the IntercontinentalExchange Inc. that would trade alongside the No. 2 futures contract, Dow Jones Newswires reported this week, quoting a company executive.

Ben Jackson, president and chief operating officer of ICE Futures U.S., was quoted as saying the exchange has had “in-depth” conversations about a global contract. He said it isnΆt clear when the contract will be finalized.

Futures contracts “either work and theyΆre very successful or they fail, so weΆre taking our time,” he told The Wall Street Journal at a cotton conference in New York.

The origin of the cotton that could be delivered to fulfill futures contracts is one point market participants are debating.

A cotton industry executive with knowledge of the negotiations told Dow Jones that cotton from Brazil, the United States and Australia would be included in the new contract. More origins could be added later, the executive said.

Futures open interest increased 775 lots Monday to 161,274, with DecemberΆs up 662 lots to 140,846 and MarchΆs up 222 lots to 13,585.

Certificated stocks grew 775 bales to 540,991. There were 14,665 newly certified bales, 13,910 bales decertified and no bales awaiting review.