Wild price action on huge volumes has culminated with strong weekly gains in cotton futures amid growing concerns about tight nearby supplies of tenderable qualities and low stocks in deliverable position.

Spot December advanced 701 points or 9.9 percent for the week ended Thursday to close at 77.72 cents. It locked up the 300-point limit Wednesday, plunged the limit the next day after hitting a five-month high, and clawed upward to settle slightly below unchanged for the day.

December at its high of 79.19 cents — up 878 points or 12.5 percent from the prior-week reaction low after bearish USDA supply-demand data — was within 18 points of the top of a chart gap left May 11. A 50 percent retracement of the move from the Feb. 7 high to the June 4 low would be 81 cents.

The spot delivery inverted over March as early classing results suggested it may be difficult to acquire much tenderable cotton to rebuild certified stocks for possible delivery on December ahead of first notice day on Nov. 26. Daily futures-options volumes combined vaulted as high as 93,800 lots.

March gained 403 points or 5.7 percent for the week, closing at 75.43 cents. The December-March spread traded out to a 307-point premium on December and settled with December 229 points over, against 69 points under a week earlier.

Exchange stocks fell to a 17-year low to 7,639 bales and then edged up to 8,268 bales by Thursday, still down from 9,801 bales a week ago. DecemberΆs open interest expanded 2,491 lots on the week to 120,226 and MarchΆs rose by 4,081 lots to 58,888.

Cash grower-to-business sales on The Seam surged to a crop year high of 21,830 bales from 8,045 bales. Prices rose to an average of 66.58 cents from 65.99 cents as premiums over loan repayment rates gained 195 points to 14.67 cents.

Early futures gains smacked of fund short-covering and new buying as technical aspects improved. Hedgers rolled some shorts from December into March, sources said, and merchants also may have covered some shorts and hedged new purchases from producers in March as well as some in December.

Veteran analysts say the percentage of tenderable cotton in the U.S. crop classed thus far is the smallest in many years. More than half the crop is not tenderable.

“Eventually, there will be enough available cotton to be brought to the board,” said Sharon Johnson, cotton specialist with Knight Futures in Atlanta. This is why the March-May, March-July and May-July spreads show a carry, she said.

While the current inverted nearby spread would be expected to bring more cotton to the board, there also may be a strong taker, Johnson said. So the odds of the spread correcting toward full carry are believed low.

A move to a psychological 80-cent target in the face of overwhelmingly bearish fundamentals would be “absolutely the worst thing that can happen to demand,” Johnson asserted. Mills would not chase the price but use more synthetics in their fiber mixes, she said.

This also would set up the potential for prices not to move as high as otherwise would be the case in the second half of the crop year despite prospects for a significant drop in cotton acres, Johnson said.

On the crop scene, U.S. upland classing increased to 604,507 running bales during the week ended Oct. 11 from 527,082 the previous week. This boosted the total for the season to 2.234 million bales, 22 percent behind 2.851 million classed a year ago.

Tenderable cotton improved slightly to 45.6 percent from the prior weekΆs 44.2 percent but totaled only 46.3 percent for the season. A year ago, tenderable cotton accounted for 66.3 percent of the 897,697 bales classed for the week and 59.1 percent for the season.

With around 14 percent of the upland crop estimated by USDA classed, early results suggested that hot, dry conditions in much of the belt during the growing season adversely affected fiber characteristics.

A concentration of high micronaire readings — a measurement of fiber fineness affected by crop maturity — has drawn the most attention. High-mike cotton is vulnerable to breakage during spinning at textile mills.

Questions about the size of the crop also have persisted after USDA this month forecast the U.S. upland output at 16.63 million statistical bales, up 13 percent from last season and above the five-year average.

During the previous 20 years, the October forecast has been below final cotton production 12 times and above eight times.

Past differences between the October forecast and the final production estimate indicate chances are two out of three that the 2012-13 upland crop will range between 15.8 million and 17.5 million bales, according to USDA.

The crop forecast for the Texas High Plains at 3.96 million bales is up just over 4 percent from the five-year average and from industry estimates of mostly around 3.5 million bales prior to an early crop-terminating freeze. This region planted 64 percent of the statewide upland acres and 25 percent of the U.S. acreage.

Some area estimates based on gin surveys have ranged around 3 million bales. The 2011 High Plains crop, hammered by historic drought, totaled only 1.835 million bales, smallest since 1992.

The U.S. harvest advanced seven percentage points to 28 percent complete during the week ended Oct. 14, down six points from a year ago and two points below the five-year average.

U.S. weekly export sales came in about as mostly expected at a combined 222,100 running bales for this season and next, up from the prior weekΆs 160,200 bales. Commitments for 2012-13 reached 5.939 million bales, 53 percent of the USDA estimate.

Slowed shipments of 97,900 bales brought exports for the season to 1.701 million, 29 percent of the commitments and 15 percent of the forecast, against 14 percent and 9 percent, respectively, a year ago.