Jump expected in U.S. weekly export sales. ChinaΆs state reserve buying and selling activity will again surpass the worldΆs largest importers and exporters, FAS says.

Cotton futures triggered buy stops en route to posting a nine-session intraday high and finishing on a new high close for the move Wednesday.

Spot March settled up 106 points to 84.79 cents, its highest close since Oct. 17 and just off the high of its 126-point range from down 10 points at 83.63 to up 116 points at 84.89 cents.

The May contract gained 92 points to 84.94 cents, July rose 64 points to 84.66 cents and December edged up 15 points to 79.17 cents.

Volume totaled an estimated 21,300 lots, about the same as the 21,316 lots the previous session when spreads totaled 3,706 lots or 41%, EFP 355 lots and EFS 31 lots. Options volume totaled 4,479 calls and 2,341 puts.

U.S. upland export sales are expected to jump to around 175,000 to 225,000 bales or more for the week ended Jan. 9 from 76,000 bales the prior holiday-shortened week. The USDA report is due at 7:30 a.m. CST on Thursday.

Talk has circulated that prices may have to ration a tight supply of U.S. cotton, expected to end this marketing year on July 31 with a carryout of 3 million bales, down 900,000 bales from beginning stocks and the smallest carryover since 2010-11.

The total supply is estimated up slightly from a month ago to 17.1 million bales, down from last seasonΆs 20.68 million bales and the smallest in 29 years. The small supply has contributed to compressing total demand to 14.1 million bales. This is down from 16.53 million bales in 2012-13 and the smallest since 1985, a 28-year low.

Larger production, mainly in Texas, allowed USDA to hike its U.S. export estimate by 100,000 bales on the month to 10.5 million, down from 13.03 million bales last season and the smallest since 2000-01.

The export estimate is a million bales below the initial 2013-14 forecasts in May when production was projected at 14 million bales, beginning stocks at 4 million bales, domestic mill use at 3.5 million bales and ending stocks at 3 million.

The global outlook in USDAΆs January supply-demand report was largely unchanged except for a surprising million-bale jump in ChinaΆs crop, accounting for a corresponding increase in ChinaΆs ending stocks and most of a 1.2 million expansion to a new record high in the world carryout.

In a circular on world markets and trade, USDAΆs Foreign Agricultural Service said ChinaΆs state reserve buying and selling activity, now in the third year of the price support program, again will surpass the worldΆs largest importers and exporters this season.

To limit the growth of its stocks, the government has been selling into the domestic market. However, the state reserve also continues to buy from both domestic and foreign markets, FAS said.

In fact, in each of the previous two years, reserve purchases of foreign cotton are estimated to have been about 3 million bales, making it one of the worldΆs largest buyers. The state reserve also has become one of the worldΆs largest sellers, with sales exceeding U.S. exports.

With the need to rotate its massive inventory, and the stated objective of reducing the level of stocks, the state reserve is likely to retain its dominant market position for several years, FAS said.

Futures open interest dropped 199 lots Tuesday to 177,023, with MarchΆs down 1,457 lots to 108,279 and MayΆs down 293 lots to 34,421. Cert stocks grew 1,581 bales to 46,474.

World values as measured by the Cotlook A Index gained 20 points Wednesday morning to 89.45 cents. The premium to TuesdayΆs March futures settlement widened 15 points to 5.72 cents.