Analysts estimate U.S. 2014-15 production at 15 million bales and ending stocks at 4 million bales ahead of USDA supply-demand report. Export hike and corresponding cut in carryout expected for 2013-14.

Cotton futures climbed above highs of the previous three sessions in July and finished near there, while December traded within its prior-day range and settled a few ticks in the red in heavy dealings Tuesday.

July surged 175 points to close at 86.30 cents, jumping from a 10-point loss at 84.45 to a 211-point gain at 86.66 cents. December closed off four points at 77.25 cents, slightly below the midpoint of its tight 64-point range from down 28 points at 77.01 to up 36 points at 77.65.

The inverted July-December switch traded as wide as 934 points within a 207-point span and settled at a difference of 905 points, up 179 points.

Volume leaped to an estimated 56,900 lots from 31,518 lots the prior session when spreads accounted for 19,188 lots or 61% and EFP for 460 lots. Options volume totaled 2,661 calls and 2,560 puts.

A survey of cotton analysts by Dow Jones Newswires showed an average U.S. crop estimate for 2014-15 of 15 million bales, up from USDAΆs May forecast of 14.5 million bales and 12.91 million bales in 2013-14. Estimates ranged from 14.4 million to 15.2 million bales.

The USDA will release its updated U.S. and world supply-demand estimates for both marketing years at 11 a.m. CDT Wednesday.

Analysts estimated exports at an average of 10 million bales within a range from 9.7 million to 10.1 million bales, compared with USDAΆs forecast of 9.7 million and its 2013-14 projection of 10.4 million. No estimate was reported for domestic mill use, estimated by USDA at 3.7 million bales, up from 3.6 million this season.

Ending stocks were pegged at 4 million bales within a range from 3.6 million to 4.3 million bales. This compares with USDAΆs estimates of 3.9 million for 2014-15 and 2.8 million for 2013-14.

An increase in the 2013-14 export estimate is expected to result in a corresponding cut in this seasonΆs carryout, though some say USDA at this late stage — the crop year ends next month — might defer an adjustment.

Recent positive weekly sales and exports running ahead of the pace needed to achieve the current estimate would appear to justify an increase. This would reinforce views that supplies could remain pinched until new-crop cotton begins to replenish depleted pipelines in significant volume in November.

With the U.S. crop for 2013-14 having entered the record books, supplies for this season will remain — barring an unexpected change in beginning stocks — at 16.82 million bales, smallest since 1984.

On the world scene, the International Cotton Advisory Committee earlier this month left its June forecast of global production unchanged at 115.6 million bales and shaved its consumption estimate by 0.57% from its May projection to 111.1 million bales.

The USDA last month projected world production at 115.46 million bales and consumption at 111.83 million bales, against 117.13 million and 109.38 million bales, respectively, this season. Modest growth in world gross domestic product is expected to support 2014-15 consumption growth.

Although projected at the lowest in five years, production has remained above expectations for consumption. Based on USDAΆs initial projections, China, India, the United States and Pakistan would account for a combined 71% of world production, similar to 2013-14.

Mill use is expected to continue to expand from its eight-year low of 102.86 million bales in 2011-12. China, India and Pakistan are expected to lead global cotton mill use, accounting for a combined 65% of world consumption in the first 2014-15 estimates, up slightly from this season.

Futures open interest dipped 301 lots Monday to 181,121, with JulyΆs down 5,208 lots to 75,309 and DecemberΆs up 3,961 lots to 89,928. Cert stocks grew 2,641 bales to 414,021. There were 3,441 newly certified bales, 800 bales decertified and 10,134 bales awaiting review. The growth lately has been variously attributed to possible reclassifications and/or fresh certifications of uncommitted cotton.

World values as measured by the Cotlook A Index eased 10 points Tuesday morning to 89.45 cents. The premium to MondayΆs July futures settlement widened 13 points to 4.90 cents.

Forward A Index values for 2014-15 dropped 65 points to 84.95 cents, widening the discount to the 2013-14 index by 55 points to 4.50 cents and the premium to MondayΆs December futures close by six points to 7.66 cents.