By Duane Howell

Ongoing concerns about the late and small U.S. crop, reports of reduced output in China and an upward-tilting chart pattern of daily lows have underpinned moderate gains in cotton futures in thin dealings.

Benchmark December gained 75 points for the week ended Thursday to close at 85.47 cents, while March rose 72 points to settle at 85.18 cents.

Volume averaged only about 10,200 lots per session and was just 6,400 lots on Monday, lowest since Friday, July 5, when many traders were still away for the Independence Day holiday.

December held on downswings six consecutive sessions at lows ranging from 84.07 to 84.22, then posted a low at 84.65 on Thursday and a high at 85.58, approaching both the prior weekΆs four-week high (85.78) and the 50-day moving average (85.79).

Cash grower-to-business sales increased to 2,764 bales on The Seam from 2,143 bales the previous week. Prices averaged 79.34 cents, up from 78.77 cents, with premiums over loan repayment rates up 10 points to 79.34 cents. Daily price averages ranged from 77.42 to 84.42 cents.

U.S. crop conditions improved a bit during the week ended Sept. 22, USDA data showed, with good to excellent up a percentage point to 44 percent and poor to very poor down a point to 23 percent.

The DTN cotton condition index edged up to 97 from 94 a week ago and 82 a year ago.

Texas cotton improved marginally, with excellent up a point to 6 percent, good steady at 26 percent, fair unchanged at 35 percent, poor down two points to 17 percent and very poor up a point to 16 percent.

Boll opening advanced 11 points to 47 percent, behind 67 percent last year and 62 percent for the five-year average, while harvesting crept up a point to 5 percent, behind 9 percent a year ago and 10 percent on average.

U.S. ginning totaled 291,850 running bales through Sept. 15, down from 755,500 bales a year ago, 1,094,750 bales in 2011 and 747,200 bales in 2010. Texas gins had processed 286,900 bales, compared with 691,350 in 2012, 1,012,450 in 2011 and 521,550 in 2010.

In China, the worldΆs largest cotton consumer and importer, the crop is expected to come in at 6.315 million metric tons (29.01 million bales), down 5.6 percent from last year, Dow Jones Newswires said a Ministry of Agriculture official estimated in a China Cotton Association report.

The USDA earlier this month projected the crop in China, also the worldΆs largest cotton producer, at 33 million bales, down 2 million bales from its estimate of the 2012-13 output and a three-year low. Updated USDA supply-demand estimates will be released Oct. 11.

Excessive rains and more forecast in India, the worldΆs second-largest cotton producer, also drew attention. The USDA raised its September crop estimate for India a million bales to a record 29 million.

On the demand scene, slow U.S. all-cotton export sales of 87,400 running bales during the week ended Sept. 19 for shipment this season boosted 2013-14 commitments to 4.095 million, down 1.269 million bales from a year ago.

Uncertainty about the size and quality of the U.S. crop may be making shippers hesitant to commit very much cotton, especially high grades, at this time, analysts said.

Commitments reached about 41 percent of the USDA forecast, compared with about 42 percent of final 2012-13 shipments at the corresponding point last season. Sales need to average roughly 136,200 running bales a week to match the USDA estimate.

All-cotton shipments of 107,500 running bales brought exports for the season to 1.27 million, narrowing the lead over exports a year ago to about 52,000 bales. Shipments have reached almost 13 percent of the USDA estimate, against nearly 10 percent of final exports a year ago.

To achieve the USDA forecast, shipments need to average approximately 200,400 running bales per week.

Lower U.S. exports are part of global trade expected to reach only 39 million bales in 2013-14, 17 percent below the record 46.7 million bales set in 2012-13. The reduced trade is attributed to the 9.3-million-bale decline to 11 million in ChinaΆs expected cotton imports this season.

Some of ChinaΆs stocks built up over the last several seasons are expected to be made available to the domestic spinning industry there, thus reducing the need for imports from the levels of 2011-12 and 2012-13. ThereΆs been talk that China may resume sales in October. However, market activity in China will be suspended Oct. 1-7 for national holidays.

A number of other major importers are expected to purchase more cotton this season, including Turkey, Pakistan, Indonesia and Vietnam.

With reduced global import demand, competition among the major exporting countries likely will increase. All the leading exporters are expected to see reduced shipments this season, according to USDA.

In addition to the 20 percent decline to 10.4 million bales forecast for the United States, lower shipments also are projected for India at 7 million bales, Australia at 4.2 million and Brazil at 2.6 million bales.

For Australia and Brazil, sharply lower beginning stocks have resulted in lower exportable supplies.

Meanwhile, trend-following funds bought 1,017 lots in futures-options combined during the week ended Sept. 17 to boost their net longs 2.9 percent to 36,265 lots, according to supplemental traders-commitments data reported by the Commodity Futures Trading Commission.

This was the first net long increase by those funds in four weeks. Index funds sold a net 172 lots to ease their net longs down to 75,000 lots, while traders with non-reportable positions sold 899 lots to cut theirs to 4,355 lots.

Commercials bought a net 53 lots, adding 5,941 longs along with 5,888 shorts to nudge their net shorts down to 115,621 lots. In futures only, non-commercialsΆ net longs were up 0.1 of a percentage point on mainly short-covering to 26.1 percent of the rising open interest.