District crop estimates for Texas raised eyebrows. U.S. commitments stand at 56% of the new USDA export estimate and shipments at 11%.

Cotton futures rallied from a shallow dip to finish higher Friday, recovering nearly all of what it lost the prior session.

December gained 78 points to settle at 68.62 cents, around the upper quarter of its 127-point range from down 17 points at 67.67 cents to up 110 points at 68.94 cents. It traded from a tick above the prior-day low to within 17 points of the high and dipped 22 points for the week.

March added 79 points to close at 68.16 cents, trading within a 114-point range from 67.23 to 68.37 cents and easing 13 points for the week to narrow December’s settlement premium to 46 points.

Volume slowed to an estimated 16,143 lots from 28,774 lots the prior session when spreads accounted for 12,811 lots or 45% and EFP 118 lots. Options volume declined to 2,313 lots (1,781 calls and 532 puts) from 6,515 lots (2,478 calls and 4,037 puts).

While USDA’s U.S. all-cotton production forecast was in line with published private estimates this week and the projection for top-producing Texas wasn’t surprising, the way USDA got to the statewide figure raised a lot of eyebrows.

The forecast for Texas fell 300,000 bales from the September projection to 9 million bales, with 255,000 bales of the reduction concentrated in the High Plains where persistent cloudy, cool, wet conditions coming into October had slowed fiber maturity.

That left a cut of only 45,000 bales for the remainder of the state, including losses in South Texas to Hurricane Harvey. The only explanation that analysts could come up with was that USDA earlier may have grossly underestimated South Texas yield potentials.

As for the High Plains, some analysts contend the crop still could swing up or down several hundred thousand bales, depending upon weather conditions.

If achieved, the High Plains estimate of 5.44 million bales, based on conditions around Oct. 1, would be the second largest on record behind 5.677 million bales in 2005 and up from 5.118 million bales last year.

Prospects in the adjoining Rolling Plains remained at 1.145 million bales, down from 1.244 million last season. Combined, the 6.585 million bales estimated for the four Plains crop reporting districts represent 73% of the projected Texas output and 32% of the U.S. upland production.

Meanwhile, U.S. all-cotton export sales for shipment this season of 176,400 running bales during the week ended Oct. 5, down from 184,600 RB the prior week, brought 2017-18 commitments to 7.886 million RB.

Commitments, given a head start by rollovers of unshipped sales from last season, were up 2.146 million RB or a narrowed 37% from cumulative sales a year ago and were 56% of USDA’s reduced export forecast. Total sales last year ago stood at 40% of final 2016-17 shipments.

All-cotton shipments of 122,300 RB, up slightly from 119,800 RB the week before, lifted the total for the season to 1.546 million RB, down 258,000 RB or 14% from year-ago exports. Shipments were 11% of the USDA estimate, compared with 12% of final exports last year.

Achieving the USDA estimate now will require shipments of roughly 298,100 RB a week, while weekly sales averaging around 147,100 RB would match the export forecast.

Sales for shipment next season of 9,300 RB, down from 28,600 RB the week before, brought 2018-19 commitments to 783,000 RB, up from 428,000 RB in forward bookings a year ago.

Futures open interest dipped 526 lots to 229,543 on Thursday, with matured October’s down 10 lots to zero, December’s down 1,862 lots to 123,670 and March’s up 851 lots to 72,361. Certified stocks were unchanged at 6,674 bales.