Concerns about tightening supply-demand balance outside China drive world prices higher, ICAC says. India overtook United States as largest exporter to China in 2011-12. Rains missed key dryland areas on Plains.

Cotton futures wiped out the previous sessionΆs losses and then some in brisk activity Tuesday as spot May settled at an eight-session high.

The May contract closed up 148 points to 88.87 cents, in the upper third of its 248-point range from down 18 points at 87.21 cents to up 230 points at 89.69 cents. It settled at its highest close since March 20.

July gained 150 points to 90.34 cents, also in the upper third of its 255-point range from 88.60 to 91.15 cents, and December rose 61 points to 87.54 cents, in the upper half of its 157-point span from 86.53 to 88.10 cents.

Volume climbed to an estimated 37,900 lots from 28,980 lots the previous session when spreads amounted to 16,178 lots or 56%, EFP 128 lots and EFS eight lots. Options volume totaled 9,167 calls and 4,027 puts.

Concerns about a tightening supply-demand balance outside China as China continues to build reserves may be the main factor behind the recent rise in cotton prices, says the International Cotton Advisory Committee.

The ICAC raised its forecast of the season-long price average of world prices as measured by the Cotlook A Index to 90 cents per pound from 87 cents a month ago and projected an average of 118 cents in 2013-14.

The A Index rose to 98.85 cents on March 18, receded to 93.15 cents on March 26 and bounced to 94.80 cents on March 28. The average last season was 100 cents.

Confidence intervals of 95% for the price projections range from 78 to 100 cents for 2012-13 and 95 to 147 cents for 2013-14, ICAC says.

Noting that the United States used to be the largest cotton exporter to China, the ICAC pointed out in its latest monthly report that U.S. shipments increased from 50,000 metric tons (229,600 480-pound bales) in 2001-02 to 1.3 million tons (5.97 million bales) in 2011-12.

Last season, India overtook the United States, exporting 1.94 million tons (8.91 million bales) to China. However, midway through this season, Australia has surpassed both India and the United States, exporting 578,000 tons (2.655 million bales) to China.

Compared with the corresponding period last season, Brazilian and Uzbek exports to China remained stable at 284,500 tons (1.31 million bales) and 189,000 tons (868,100 bales), respectively.

For the past five seasons, African countries contributed on average 10% of total exports to China. Last season, Africa exported 482,700 tons (2.22 million bales) to China. The top three exporting countries were Burkina Faso, Cameroon and Benin.

During the first seven months of the current season, Mali, Zambia and Zimbabwe already have exported a total of 125,000 tons (574,115 bales) to China, the ICAC report said.

Meanwhile, overnight showers and thunderstorms in the Texas High Plains cotton area were mainly in the area north of Lubbock. Official rainfall amounts at 14 of 38 reporting sites averaged 0.34-inch, ranging mostly from a few hundredths of an inch to 0.86-inch.

Lubbock received only a trace, and key dryland areas to the south got nothing. Rain chances are listed at 50% today, 60% tonight and 50% Wednesday, with sunny to mostly sunny skies then expected through Monday. Around a quarter of an inch is expected today.

Futures open interest fell 2,177 lots Monday to 208,275, with MayΆs down 6,680 lots to 113,724, JulyΆs up 3,787 lots to 51,794 and DecemberΆs up 671 lots to 40,858.

Certificated stocks grew 6,167 bales to 424,338, with 8,327 newly certified bales, 2,160 bales decertified and 8,623 bales awaiting review.

The Cotlook A Index fell 80 points Tuesday morning to 94 cents, widening the premium to MondayΆs May futures settlement to 6.61 cents.