Cotton’s historic bull market has galloped to new all-time highs for the third straight week and to new contract highs across the board.

A variety of factors energized fresh fund and speculator buying, short-covering and stop-loss activity in heavy dealings involving up to 75 percent spread trading. Technical considerations following an outside-range reversal to the upside on Monday played a role.

Futures for the week ended Thursday soared 15.72 cents to 187.58 cents in spot March, 17.16 cents to 184.98 in May, 19.47 cents to 179.47 in July, 15.44 cents to 131.50 in December 2011 and 14.74 cents to 124.28 in March 2012. Spot March set two record highs in a row.

The market finished locked up the 700-point daily limit in current-crop deliveries and nearly limit up in most new-crop contracts. Cotton is the star performer thus far in 2011 in the Reuters-Jefferies commodities index with a gain of 29.5 percent. It also was the top gainer in 2010, jumping about 90 percent.

Mill fixations remained a force. March options expired Friday and first notice day for March deliveries is Feb. 22. Unfixed mill sales based in March declined 4,919 lots during the week ended Feb. 4 to 15,884.

The exchange raised initial per-contract margins by $1,000 to $5,000 for hedgers and by $1,400 to $7,000 for speculators. An additional $1,000 is required for those participating in the front (March 2011) contract.

“Besides the higher margin requirements, volatility has increased dramatically as new spec activity has flocked to cotton,” said Sharon Johnson, senior cotton analyst with Penson Futures in Atlanta.

The higher volatility produced daily trading ranges of 5 to 9 cents in most contracts and increased options premiums, she said, adding that an at-the-money call in July closed at 2,686 points or $13,430.

Cash grower sales on The Seam fell to 5,960 bales from 14,484 bales the previous week. Prices hit a series of record daily averages and surged 12.65 cents to a weekly average of 173.75 cents. Premiums over loan redemption rates jumped 11.97 cents to 120.19 cents.

World values as measured by the Cotlook A Index also surged to two consecutive new all-time highs, rising to 209.75 cents Thursday morning from 205.05 cents a week earlier and maintaining a wide premium over the prior-day spot futures settlement of 29.17 cents.

Reports of ongoing drought in China, defaults on Indian cotton contracts in China, a possible cut in India’s crop estimate to keep a lid on exports from there and U.S. planting intentions near the low end of expectations all drew market attention.

Constructive U.S. weekly export sales of 326,500 running bales — 120,900 bales for this season and 205,600 bales for next season — also contributed support. Shipments topped the weekly pace needed to achieve the USDA forecast, climbing to 494,900 running bales and notching a marketing year high for the third week in a row.

The market shrugged off China’s move to tame inflation with an interest rate increase for the second time in just over six weeks. Traders said the increase would not slow cotton demand.

An increase by Brazil’s National Commodities Supply Corp. (CONAB) to 1.95 million metric tons (8.96 million bales) in its estimate of the country’s cotton output, compared with USDA’s latest forecast of 8.2 million, also failed to temper the buying spree.

The USDA left its U.S. supply-demand estimates unchanged in its updated February report and made only marginal changes in its world forecasts. But the cotton market tailgated bullish grain numbers.

Traders took note of Chinese Academy of Agricultural Sciences survey indicating China’s cotton area is likely to expand 4.1 percent to 5.17 million hectares (12.775 million acres).

The National Cotton Council’s closely watched planting intentions survey showed U.S. producers, responding to price signals, plan to plant 12.5 million acres of cotton this spring, up 14 percent from last year’s 10.97 million.

Acreage guesstimates had ranged predominantly from 12.6 million to 12.9 million. Survey forms, mailed in mid-December, were collected through about mid-January and new-crop futures have since rallied sharply. Competing crop prices also have remained strong.

With average abandonment of 11 percent, the harvested area would total about 11.1 million acres, up 3.7 percent from 2010-11 when unusually low abandonment left 10.707 million acres for harvest. Applying state-level yield assumptions to projected harvested acres would produce 19.2 million bales, up 4.8 percent from 18.32 million bales in 2010-11.

“Final acreage decisions will be sensitive to how prices move between now and planting time,” emphasized Gary Adams, NCC vice president and economist. “This, along with a number of other issues, including weather, could cause actual plantings to differ from growers’ stated intentions.”

State and regional percentage increases reported in the survey make sense, says John Robinson, Texas A&M extension cotton marketing economist.

“Because these intentions were measured before the most recent price rally, and because it is still early enough, they are subject to influence and marginal changes,” Robinson said. “But these numbers are an important benchmark that everybody will be anticipating, digesting and comparing to the next benchmark (USDA’s March 31 prospective plantings).”

Robinson expects the final planted area to be skewed a little higher than normal above the harvested acreage. Drier weather at planting time, and the possibility of cropland reserve program acreage being brought into cotton production, could contribute to a higher abandonment, he said.

“So even if there is more planted acreage, I would discount its effect on the market until we have more evidence of crop condition, abandonment and yield potential,” he said.

Informa Economics, Memphis-based analytical firm, projected plantings of 13.34 million acres after the deadline for responses to the NCC survey had expired. Foreign growers also are expected to boost cotton plantings.

But the NCC economists still foresee continued tightness in the overall supply-demand situation and ongoing pressure from competing crops.