Cut in the U.S. 2013-14 crop forecast contributes to tight domestic ending stocks. World changes for the month resulted primarily from sharp increase in ChinaΆs 2012-13 imports.

Cotton futures surged to new session highs and closed with strong gains Wednesday after USDA chopped its U.S. 2013-14 crop estimate, contributing to a tight ending stocks forecast.

Spot July settled up 200 points to 90.06 cents, the highest spot continuation finish since March 19 and near the high of its 343-point range from down 118 points at 86.88 to up 225 points at 90.31 cents.

December led the advance, closing up 289 points to 88.07 cents, also near the high of its 393-point range from down 93 points at 84.25 to up 300 points at 88.18 cents. It reversed after falling below lows of the previous three sessions.

Volume remained heavy at an estimated 61,599 lots, against a whopping 69,253 lots the previous session when spreads totaled 35,022 lots or 51%, EFP 1,975 lots and block trades 692 lots. Options volume totaled 17,784 lots — 9,625 calls and 8,159 puts.

The new-crop supply-demand balance sheet featured lower beginning and ending stocks, lower production and higher prices from a month ago, USDA said, cutting the 2013-14 carryout to a tight 2.6 million bales.

Exports for this season were raised 350,000 bales to 13.6 million, domestic mill use rose 50,000 bales to 3.45 million and ending stocks fell 400,000 bales to 3.6 million.

The old-crop export increase reflects continued strong sales and shipments and expected higher imports by China, USDA said. Many in the industry had expected an increase, the question having been by how much.

Production for 2013-14 fell 500,000 bales to 13.5 million as continued drought in the Southwest raised abandonment. Analysts surveyed by Dow Jones Newswires had expected on average a slight increase.

The USDA carried forward the March planting intentions, cut the acres-for-harvest estimate by 300,000 from a month ago to 8.10 million and left the yield projection at 800 pounds, down from 887 pounds in 2012-13. This reflects an abandonment of 1.93 million acres or 19.3%. Abandonment in the Southwest is estimated at 32%, up from 25% forecast a month ago.

With the total 2013-14 supply projected down 900,000 bales from last month, exports fell 500,000 bales to 11 million and ending stocks skidded to the equivalent of 18% of overall use.

The USDA raised its projection of the marketing-year average price by 5 cents on each end of the range to 73 to 93 cents, with the midpoint of 83 cents up 15% from the estimated 72-cent average for 2012-13.

Globally, changes on the month for both 2012-13 and 2013-14 resulted primarily from a sharp increase of 1.75 million bales in ChinaΆs 2012-13 imports to 20 million.

Higher imports by China this season are drawing stocks from exporting countries and constraining the 2013-14 supply available for global consumption and trade outside China, USDA noted.

World 2013-14 production fell a slight 660,000 bales on the month to 117.16 million, based on lower crops for the United States, Turkmenistan and others. Consumption also eased slightly, falling 260,000 bales to 110.17 million.

ChinaΆs projected imports for 2013-14 fell a million bales to 11 million, accounting for most of the 1.1-million bale drop to 38.4 million in world trade, while higher imports by China in 2012-13 raised beginning stocks and domestic supplies.

Projected world 2013-14 ending stocks dipped a marginal 250,000 bales on the month to 92.49 million, but a 750,000-bale hike in ChinaΆs carryout left stocks outside China about 3% lower at 33.56 million bales.

These projections assume that China continues current policies regulating the national reserve acquisition and release prices, USDA said.

ChinaΆs stocks are estimated at 63.7% of the world carryout in 2013-14, up from 58.9% in 2012-13. Stocks of this magnitude in China arenΆt sustainable, an industry specialist said, adding that the larger they grow, the more likely Beijing is to act.

Futures open interest expanded 3,551 lots Tuesday to 186,875, with JulyΆs down 7,077 lots to 67,622 and DecemberΆs up 9,873 lots to 108,874.

Certificated stocks grew 4,846 bales to 533,670. There were 22,803 bales awaiting review.

World values as measured by the Cotlook A Index fell 80 points Wednesday morning to 93.10 cents. The move aligned more closely to TuesdayΆs 70-point loss to 85.18 cents in most-liquid December futures, narrowing the index premium 10 points to 7.92 cents, than to the gain in the soon-to-mature spot contract.