By Duane Howell

Short-covering and technical buying spurred cotton futures to a four-week high close last week amid reawakened perceptions of tight U.S. old-crop supplies and declines in crop conditions.

Benchmark December gained 125 points for the week ended Thursday to close at 65.92 cents, highest since July 24. It hit a high of 66.67 cents and settled near a 25 percent retracement (65.99) of the 15.88-cent skid from the June 23 high to the contract low of 62.02 on Aug. 1.

Nearby, thinly traded October jumped to a 58-point settlement premium to December, closing at 66.50 cents to invert from a 78-point discount, and the December-March spread narrowed to 50 points carry, tightest since June 5.

Cash trading resumed on The SeamΆs grower-to-business exchange where 1,340 bales changed hands, including new-crop cotton from South Texas. Prices averaged 65.31 cents, reflecting premiums of 9.56 cents over loan repayment rates of 55.75 cents.

U.S. weekly export sales came in near to slightly below the low end of expectations and appeared to have contributed to dragging prices off the high at the end of the period, though early demand still is off to an outstanding start.

Net sales of 158,200 running bales during the week ended Aug. 14, down from 179,700 bales the previous week, brought 2014-15 commitments to 4.772 million bales.

Commitments rose to 1.278 million bales, or 37 percent ahead of bookings a year ago and 46 percent of USDAΆs forecast. A year ago, sales were 34 percent of final 2013-14 exports. Shipments of 109,900 bales, up from 99,200 bales, hiked exports for the season to 209,000 bales.

To achieve the estimate, shipments need to average roughly 203,400 running bales a week, while sales averaging approximately 112,100 bales would match the forecast.

On the U.S. crop scene, conditions declined to the lowest of the season during the week ended Sunday, according to USDA, with good to excellent down two percentage points to 50 percent and poor to very poor up two points to 16 percent.

A year ago, good to excellent totaled 46 percent and poor to very poor 23 percent. The DTN cotton crop conditions index fell to 125 from 132 but was up from 100 a year ago.

In Texas, good-excellent cotton fell two points to 35 percent and poor to very poor rose two points to 24 percent. The year-ago readings also showed 35 percent good-excellent and poor-very poor up to 34 percent.

Cotton setting bolls rose by eight points nationally to 88 percent, up from 83 percent a year ago and even with the five-year average. Boll opening increased by five points to 12 percent, up from 8 percent last year and also even with the average.

In the Texas High Plains, topsoil moisture was short to very short in 73 percent of the northern district and 91 percent of the southern area, while subsoil moisture was rated short to very short in 61 percent and 87 percent, respectively.

On the international scene, China imported 280,000 metric tons of raw cotton (1.286 million bales) in July, up 6.2 percent from June but down 17 percent from a year ago, according to preliminary customs data.

Cumulative imports for the 2013-14 marketing year ended July 31 totaled about 3.075 million tons, down from 4.426 million tons the previous season.

The USDA earlier this month raised its estimate of ChinaΆs 2013-14 imports by 100,000 bales to 13.6 million, still roughly 500,000 bales below the total indicated by the preliminary customs data for July.

That estimate has been boosted by USDAΆs World Agricultural Outlook Board every month since March when ChinaΆs imports were projected at 11 million bales, same as in August 2013. Quality issues with cotton offered to mills from ChinaΆs reserve stockpile have been among the factors cited by industry analysts behind the higher-than-expected imports.

Some industry analysts insist USDA also has underestimated ChinaΆs 2014-15 imports at 8 million bales, down 43 percent from the 2013-14 customs data, partly also because of questionable quality of the reserves and more competitive cotton prices against man-made fibers.

In its August supply-demand report, the International Cotton Advisory Committee forecast ChinaΆs 2014-15 imports at 2.2 million tons, or 10.1 million bales, down about 26 percent from its estimate for 2013-14.

The USDA expects Beijing to limit imports in order to boost consumption of surplus domestic cotton supplies. However, USDA expects increases in several countries to help offset a portion of ChinaΆs decline, including Pakistan, Bangladesh and Vietnam.

Elsewhere, the Cotton Association of India has forecast the countryΆs 2014-15 production at 39.625 million bales of 170 kilos, or 30.957 million bales of 480 pounds. The associationΆs initial new-crop forecast is down from an upwardly revised 40.05 million 170-kilo bales, or 31.29 million 480-pound bales now estimated for 2013-14.

The CAI estimate for 2014-15 compares with USDAΆs forecast in 480-pound bales earlier this month of 29 million, down 5 from the USDA figure for 2013-14 of 30.5 million bales. If achieved, the CAI estimate for 2014-15 would rank India ahead of USDAΆs forecast for China of 29.5 million bales as the worldΆs top cotton producer.

A late monsoon is expected to boost IndiaΆs cotton area, with some acres of other crops with earlier planting windows seen moving into cotton. However, the delayed monsoon is expected to reduce yields.

Meanwhile, trend-following funds sold a net 2,257 lots in U.S. futures-options combined during the week ended Aug. 12 to boost their net short position by 15.9 percent to 16,475 lots, government data showed.

The reporting week ended on the day USDA released bearish supply-demand estimates. Index funds sold 2,054 lots to reduce their net longs to 53,657, while small traders bought 436 lots to shave their net shorts to 3,708 lots. Commercials bought 3,876 lots, covering 2,284 shorts and adding 1,592 longs to cut their net shorts to 33,475 lots.