Cotton futures advanced last week even as global equities and most commodities plummeted amid growing fears about a slowing world economy.

Benchmark December gained 235 points or 2.3 percent for the week ended Thursday to close at 104.92 cents, finishing in the upper half of its 1,005-point trading range. March rose 166 points or 1.7 percent to 102.41 cents.

December rallied from a low of 98.57 cents and completed filling a chart gap at 104.46 en route to hitting a high of 108.62 cents, achieving for practical purposes an upside technical objective.

CottonΆs performance stood out against intensive “get-out-of-risk” selling across most markets — likened by some to a financial Armageddon — amid policymaker paralysis in Europe and a dysfunctional Washington.

U.S. weekly export sales were disappointing. Old-crop sales did snap a string of six consecutive weeks of cancellations on light net sales of 8,800 bales, while new-crop business totaled an anemic 3,200 bales.

Shipments slowed to just 108,800 running bales for the week ended July 28. This left roughly 283,900 running bales to be shipped in the remaining three days of the marketing year to meet the USDA estimate.

“ItΆs a strange thing to say but the only thing bulls have going for them is the market action itself,” a veteran cotton analyst commented.

Cash sales totaled 518 bales on The SeamΆs grower-to-business exchange, the first G2B sales since June 24. Prices averaged 96.86 cents, reflecting premiums of 45.20 cents over loan redemption rates.

On the crop scene, Informa Economics, Memphis-based analytical firm, projected a U.S. output of 17.22 million bales, trade sources said, up from 16 million bales foreseen by USDA last month but down from 18.1 million bales harvested last season.

The firmΆs forecast is far above street estimates, including recent projections of 15.4 million to 15.7 million bales by panelists on the monthly Ag Market Network conference call.

The USDA will issue its updated domestic and world supply-demand estimates Thursday. Informa estimated the crop in top-producing Texas at 5.1 million bales, down from 7.84 million bales the previous year but up from 4.62 million bales two years ago.

U.S. cotton ratings improved during the week ended July 31, with good to excellent up a percentage point to 30 percent, fair unchanged at 30 percent and poor to very poor down a point to 40 percent, USDA reported.

The good-to-excellent cotton remained at a record low for this time of year, below the prior mark of 34 percent in 1998. A year ago, good-excellent totaled 66 percent and poor-very poor was 9 percent.

Ratings improved in Alabama, California, Georgia, Louisiana, Mississippi, Missouri, the Carolinas and Texas. Ratings in Texas raised the good-excellent and fair a point each to 13 percent and 29 percent, respectively, and reduced the poor-very poor two points to 57 percent.

U.S. cotton at or beyond the squaring stage increased 11 points to 90 percent, two points behind average and six points behind a year ago, while boll setting expanded 16 points to 62 percent, even with the five-year average but six points behind last year.

Squaring exceeded the average only in Louisiana, Texas and Virginia, was even in Arkansas and Missouri and trailed in the other states by margins ranging from just a point at 99 percent in Mississippi to a whopping 35 points at 47 percent in Oklahoma.

Meanwhile, world cotton production is expected to exceed consumption by a narrowed 8 million bales in the 2011-12 marketing year, according to the latest estimates of the International Cotton Advisory Committee.

Production prospects declined 3 million bales from a month ago to 123 million, ICAC estimated, while projected mill use fell a million bales to 115 million. Exports were flat at 37 million bales and ending stocks were unchanged at 50 million bales.

Driven by high cotton prices in 2010-11, production will rise this season in most large cotton growing countries except the United States and could reach records in India and Australia, the ICAC secretariat said.

World mill use is expected to resume increasing if projected global economic growth materializes, ICAC said, adding that consumption will be boosted by increased availability of cotton but moderated by relatively high cotton prices and competition from chemical fibers. Consumption is forecast up 2 percent from last season.

The rebound foreseen in world ending stocks could produce a recovery in the global stocks-to-use ratio to 43 percent from 37 percent in 2010-11, ICAC said.

World prices are expected to decline from the record high 2010-11 season-average Cotlook A Index of 164 cents, which was more than twice the 2009-10 average of 78 cents, ICAC said.

In other news, India, the worldΆs second-largest cotton exporter, has allowed unrestricted cotton exports through September, a wire report said, citing a Press Trust of India report which quoted a government official.

Reuters quoted a Cotton Association of India official as saying traders hoped to export an additional 255,000 metric tons (1.12 million 480-pound bales) once various court issues were cleared. India has made multiple export policy changes the last two crop years.

The move followed an increase in IndiaΆs crop estimate by the Cotton Advisory Board to 32.5 million 375-pound bales for 2010-11. This is 25.35 million 480-pound bales, compared with USDAΆs forecast of 24.5 million.

Elsewhere, ChinaΆs cotton imports are estimated at 2.5 million metric tons (11.48 million bales) in 2011, down 12 percent from 2.84 million tons (13.04 million bales) imported last year, Dow Jones reported, citing a forecast by the China Cotton Association.

The forecast is below the associationΆs previous 2011 estimate of 2.8 million tons (12.86 million bales) as downstream textile demand remains weak. Slower growth is expected in the second half in the downstream textile sector and domestic cotton output is likely to rise, the CCA said.