By Duane Howell
For A-J Media

Cotton futures moved lower last week after a rally on a smaller-than-expected U.S. crop increase in new supply-demand estimates quickly lost momentum on slower world mill use and economic uncertainties.

Benchmark December lost 65 points for the week ended Thursday to close at 62.40 cents. This marked its lowest finish since Aug. 11, the day before last monthΆs bullishly construed supply-demand report.

December set the periodΆs entire 215-point range on Sept. 11, hitting the low and the high just before and just after the new supply-demand estimates. It surged from 62.05 cents — lowest since the contract low of 61.20 on Aug. 12 — to 64.20 cents — highest since Aug. 25 — but finished barely ahead for the day.

Failure to reach its 50-day moving average appeared to have encouraged long liquidation. Open interest coming into ThursdayΆs session was down 4,231 lots from a week earlier to 176,347.

Cash grower sales climbed to 5,555 bales on The Seam from 1,405 bales the previous week. Prices averaged 59.03 cents, down slightly from 59.19 cents, with daily averages ranging from 57.98 to 60.34 cents. Premiums averaged 11.02 cents over loan repayment rates, up from 10.20 cents.

U.S. all-cotton production is pegged at 13.428 million bales, up 346,000 bales from the August estimate but 2.9 million bales below the 2014 crop. Analysts had estimated the crop at 13.78 million bales.

The new projection, a 2.6 percent increase from August, reflects an expected increase in acres for harvest, partially offset by a lower yield, now forecast at 789 pounds, down from the five-year average of 829 pounds.

Updates put plantings at 8.556 million acres, down 4.9 percent from the previous estimate and 23 percent from last year. Acres for harvest are estimated at 8.166 million, up 3 percent from the prior month but down 13 percent from 2014.

The larger crop and expected competitiveness of U.S. cotton resulted in a 200,000-bale hike to 10.2 million in the export projection, still the lowest since 2000-01. Domestic mill use is forecast at 3.7 million bales, unchanged from last month but up 3.5 percent from last season.

Ending stocks are projected at 3.2 million bales, 500,000 below last seasonΆs carryout, with the stocks-to-use ratio of 23 percent down slightly from 25 percent in 2014-15.

The marketing year average farm price is forecast to range from 58 to 68 cents, with the midpoint of 62 cents down 3 cents from last month on larger U.S. supplies and lower world consumption.

Prospective production on the Texas High Plains rose by 280,000 bales to 3.95 million, generally in line with area industry estimates and up 21 percent from last year. This would be the areaΆs largest crop since 2010.

Acres for harvest were raised 210,000 to 3.14 million, with abandonment falling to 7.3 percent from 17.3 percent last year. Yields are projected to average 636 pounds, up from 589 pounds in 2014.

The High Plains crop is estimated at 69 percent of the Texas output and 31 percent of the U.S. upland production.

Globally, USDA cut consumption 1.21 million bales to 113.44 million, shaved production 250,000 bales to 108.74 million and raised ending stocks 1.07 million bales to 106.26 million, down from a carryout of 110.91 million in 2014-15. Consumption still is projected up 1.7 percent from last year, the fourth year — albeit slow — of expansion.

Ending world stocks outside China are forecast at 41.64 million bales, up from 40.61 million projected last month but down from 43.99 million the prior season. The production surplus outside China is expected to widen to 3.3 million bales from 2.34 million foreseen last month.

U.S. weekly export sales came in at the upper end of expectations at 100,600 running bales, up from 90,100 the previous week, boosting 2015-16 commitments to 2.978 million bales. Commitments have reached 30 percent of the USDA estimate, compared with 47 percent of final 2014-15 exports a year ago when bookings were 5.159 million bales.

Shipments fell to 66,400 bales, a six-week low, attributed partly to tight availability of specified high grades and the Labor Day holiday. Exports for the marketing year of 710,000 bales still were a narrowed 102,100 bales ahead of shipments a year ago.

On the U.S. crop scene, cotton conditions declined slightly for the fifth week in a row to a new low for the season during the week ended Sept. 13, with good to excellent down a percentage point to 52 percent and poor to very poor up a point to 13 percent, USDA reported.

Crop ratings remained ahead of a year ago when good to excellent was 49 percent and poor to very poor 18 percent. The DTN cotton condition index dipped three points to 133, up from 119 a year ago.

Boll opening advanced to 46 percent, five points behind the five-year average, and 4 percent was harvested, behind 7 percent on average.

On the international scene, news that ChinaΆs cotton imports fell nearly 66 percent last month from a year earlier to 70,000 metric tons (321,500 bales) helped to keep rally attempts in check.

The USDA left its estimate of ChinaΆs 2015-16 imports at 5.75 million bales, down 31 percent from the previous yearΆs 8.28 million bales.

With ChinaΆs cotton stocks remaining near historic highs, Beijing is expected to limit imports. Price differentials between internal and international prices also were considered partly to blame for the sharp August import decline.

Meanwhile, trend-following funds reduced their net longs by 4,436 lots, or 13.8 percent, to 27,748 in cotton futures-options combined during the week ended Sept. 8, according to government traders-commitments data.

Index funds pared their net longs by 3,661 lots to 64,516, while light activity by traders with nonreportable positions left their net longs little changed at up two lots to 1,342.

Commercials bought 8,095 lots, adding 5,991 longs and covering 2,104 shorts to reduce their net shorts to 93,607 lots.