By Duane Howell
For the Avalanche-Journal

Slow producer sales, lower crop prospects in India, U.S. dollar index weakness and technically oriented buying have combined to lift cotton futures above highs of the prior four weeks.

Spot December gained 172 points for the week ended Thursday to close at 63.44 cents. It hit a high of 64.16 cents on Tuesday, blowing through its 50-day moving average to highest intraday price since Sept. 11.

December finished up 217 points on Tuesday to 63.86 cents, its highest settlement since Aug. 24. The rally stalled near resistance marked by a 61.8 percent retracement (64.21) of the skid from the Aug. 21 high of 67.00 to the Sept. 24 contract low at 59.70 cents.

Concerns about U.S. crop quality also may have played a rally role, analysts said. Seeds have been reported sprouting in cotton bolls from the Carolinas to Georgia following weeks of unrelenting rains and warmth.

Dollar index futures fell to the lowest since Aug. 25 against a basket of currencies.

Cash grower sales climbed to 7,177 bales from 6,357 bales on The Seam, swelled by a crop year high of 3,913 bales on Tuesday. Prices averaged 57.61 cents, up from 54.41 cents, reflecting gains to 12.62 cents from 10.94 cents in premiums over loan repayment rates. Daily average prices ranged from 54.14 to 59.54 cents.

A U.S. agricultural attaché report estimated the crop in India, projected to supplant China this season as the worldΆs largest cotton producer, at 28.5 million 480-pound bales. Talk circulated that additional cuts may be ahead. The attaché estimate is down from USDAΆs latest forecast of 29 million bales, against last yearΆs 29.5 million.

Other reports have noted concern about quality in ChinaΆs main cotton province of Xinjiang. The USDA cut its October estimate of ChinaΆs crop by 700,000 bales to 25.3 million, against 30 million in 2014-15.

The Foreign Agricultural Service said in the attachéΆ report that deficit rains have stunted IndiaΆs crop growth and lowered expected yields. Rainfall during the southwest monsoon season (June-September) was 14 percent below the long-period average, according to the Indian Meteorological Department.

The Cotton Corporation of India was expected to begin procurement under the minimum support program the third week of October. New-crop arrivals of 19,500 480-pound bales were being reported daily across India.

The CCI was reported still holding almost 1.5 million bales from its 2014-15 MSP procurement.

In its October supply-demand estimates, USDA pegged U.S. all-cotton production at 13.338 million bales, down 90,000 bales or less than 1 percent from a month ago. Analysts had expected a slight increase.

Upland cotton production is forecast at 12.887 million bales, down from 12.977 million projected in September, and the Pima or extra-long staple projection of 451,000 bales was carried forward.

The biggest state changes were in Texas and Georgia where the crop estimates fell by 100,000 bales to 5.65 million and rose by 100,000 bales to 2.3 million, respectively. The crop estimate for South Carolina dropped 35,000 bales to 385,000. This doesnΆt include the effects of recent flooding, USDA said.

Crop prospects showed a smaller-than-expected increase of 30,000 bales to 3.98 million on the Texas High Plains, up from last yearΆs 3.261 bales. The High Plains is expected to account for 70 percent of the statewide output and 31 percent of the U.S. upland crop.

U.S. total cotton demand remained estimated at 13.9 million bales, 920,000 bales below last season and the smallest since a similar offtake in 1988-89. Exports at 10.2 million bales would account for 73 percent, with domestic mill use contributing the remainder.

Ending stocks are expected to fall to 3.1 million bales from last seasonΆs 3.7 million. Stocks are forecast at 22.3 percent of total use, down from 25 percent in 2014-15.

The marketing year average price at the farm level is forecast to range from 54 to 64 cents. The midpoint of 59 cents is down from 60.50 cents last season and 77.90 cents in 2013-14. Relatively weak demand for yarn and lower prices for polyester resulting from low petrochemical prices are pressuring world cotton prices.

Globally, estimated beginning stocks rose by 880,000 bales to 111.79 million, production declined 1.36 million bales to 107.38 million, consumption slid 1.17 million bales to 112.27 million and ending stocks increased 710,000 bales to 106.97 million.

The estimate of beginning stocks reflected mainly a million-bale reduction to 33 million in ChinaΆs 2014-15 consumption. ChinaΆs net cotton textile exports were lower than previously expected, USDA said.

World trade was virtually unchanged from last month at 34.2 million bales. While U.S. exports are estimated at the lowest since 2000-01, their share of world trade is forecast to reach 30 percent, second largest since 2010-11.

Global stocks are projected to decline 4 percent or nearly 5 million bales from the 2014-15 all-time high. The world stocks-to-use ratio is forecast at 95 percent, down from 101 percent last season but well above the recent low of 40 percent in 2009-10. China is expected to account for 61 percent of the world carryover, similar to the prior two seasons.

On the current crop scene, ratings slipped slightly in the week ended last Sunday, with good to excellent down a percentage point to 47 percent, fair up a point to 38 percent and poor to very poor steady at 15 percent.

A year ago, good-excellent also was 47 percent, fair 34 percent and poor-very poor 19 percent. The DTN cotton condition index eased down a point for the week to 123, up from 114 a year ago.

Boll opening rose 12 points to 89 percent, up from 76 percent a year ago and 84 percent for the five-year average, while harvesting advanced six points to 22 percent, up a point and down three points, respectively.

Meanwhile, non-commercials boosted their net longs by 3.6 percentage points to 18.1 percent of the rising open interest in futures only during the week ended Oct. 6.

DUANE HOWELL is retired farm editor of The Avalanche-Journal.