Cotton Surges to Highest Close Since Aug. 24

December leaped to its highest intraday print since Sept. 11 amid talk of slow producer sales, concerns about quality and a report of lower crop output in India where MSP procurement is expected to begin next week.

Cotton futures surged from quiet early dealings to triple-digit gains Tuesday, triggering buy stops as volume jumped to a heavy turnover.

Spot December leaped over highs of the previous four weeks and closed up 217 points to 63.86 cents, in the upper reaches of its 263-point range from down 16 points at 61.53 to up 247 points at 64.16 cents. It posted the highest intraday print since Sept. 11 and closed at the highest finish since Aug. 24.

March settled up 203 points to 63.70 cents and December 2016 gained 149 points to close at 63.81 cents.

Near December triggered a bevy of buy stops above last weekΆs high of 62.48 cents, the 40-day MA at 62.55 and the 50-day MA at 62.75. Its closing point gain was the largest since the bullish supply-demand report on Aug. 12.

Volume jumped to an estimated 45,988 lots from 17,782 lots the previous session when spreads accounted for 8,857 lots or 49.8% and EFP 22 lots. Options volume totaled 7,982 calls and 8,461 puts.

Support may have stemmed partly from talk that producers are holding out for higher prices as harvest quickens and from a U.S. agricultural attach report that IndiaΆs crop may come in below USDAΆs latest estimate.

Concerns about U.S. crop quality also may have played a role, analysts said. Seeds have been reported sprouting in cotton bolls from the Carolinas to Georgia following weeks of unrelenting rains and warm temperatures. The percentage of tenderable cotton classed so far has been below that of a year ago.

There also was talk that some fresh export business may have offered support following last weekΆs larger-than expected report showing net U.S. sales for both marketing years totaled a combined 568,200 running bales.

India, projected to supplant China this season as the worldΆs largest cotton producer, is expected to harvest 28.5 million 480-pound bales, according to the attache report from Mumbai.

This is down from USDAΆs forecast of 29 million bales, unchanged from a month ago but down from 29.5 million bales last year. The USDA shaved its crop forecast for China by 700,000 bales to 25.3 million, down from 30 million bales in 2014-15.

The Foreign Agricultural Service post in Mumbai said in the report, dated Oct. 7 and released Oct. 12, that deficit rains have led to stunted crop growth and lower expected yields.

Rainfall during the southwest monsoon season (June-September) was 14% below the long-period average, according to the Indian Meteorological Department.

The Cotton Corporation of India is expected to begin procurement under the minimum support program next week. New-crop arrivals of 19,500 480-pound bales are being reported daily across India.

The CCI continues holding almost 1.5 million bales from its 2014-15 MSP procurement, the FAS report said.

Futures open interest declined 1,567 lots Monday to 189,159, with DecemberΆs down 1,739 lots to 117,475 and MarchΆs up 887 lots to 52,489. Cert stocks were unchanged at 43,224 bales.