Cotton nearly traded limit-up Wednesday (5 cents) as news that India would allow duty-free imports to enter its country jolted the market. According to certain newswires, the government is attempting to overcome its shortfall in production by encouraging domestic mills to bring in foreign cotton tax free.

Thursday morning, USDA will issue its weekly export-sales report. Last week saw sales of 69,000 bales, which was a marketing-year low, but shipments of 455,000, a marketing-year high. Based on the aforementioned news, it will be interesting to see if India has preemptively bought U.S. cotton.

Weather-wise, the one- to five-day forecast has zero rain for West Texas. Moreover, the six- to 10-day outlook indicates well below normal chances for precipitation. As the situation stands, Western Kansas, Oklahoma and especially Texas are under severe to exceptional drought, and virtually no private nor governmental forecasts show much relief over the next 10 days.

There has been some improvement in the outlook for the eight- 14-day forecast, with above-normal chances of rain in Kansas and Oklahoma and near normal for west Texas.

The Bureau of Labor Statistics reported a record PPI number Wednesday morning. Goods and services that producers utilized rose in March at the fastest pace in 40 years. The producer price index, which measures the prices paid by wholesalers, increased 11.2% from a year ago, the most in a data series going back to November 2010. On a monthly basis, the gauge increased 1.4%, also above analysts’ estimates.

Wednesday, May cotton settled at 142.77 cents, up 4.26 cents, July closed at 141.51 cents, up 4.06 cents and December finished at 122.18 cents, 2.15 cents higher; estimated volume was 62,328 contracts.