By Duane Howell
For the Avalanche-Journal

A reversal off a seven-session low has carried cotton futures to a five-week high finish in the face of prospective U.S. plantings on the higher side of most private estimates and sluggish weekly export sales.

Spot May rose 72 points for the program week ended Thursday to finish at 58.44 cents, its highest close since Feb. 22. It finished with a gain for March of 194 points, or 3.4 percent, and closed back above its 40-day moving average. May spanned a 158-point range, from 57.01 to 58.59 cents.

July, which had closed over May the prior session for the first time since March 1, finished up 73 points to 58.31 cents as the inversion returned, while December gained 42 points to 57.77 cents.

Cash online grower sales increased to 7,085 bales from 6,536 bales on The Seam. Prices fell to an average of 48.40 cents from 50.64 cents, reflecting a decline to 5.67 cents from 7.35 cents in premiums over loan repayment rates. Daily price averages ranged from 45.91 to 50.24 cents.

All-cotton planting intentions came in at 9.562 million acres, up 11.4 percent from 8.581 million acres seeded last year, USDA reported. This compared with predominant expectations centering around 9.4 million acres and ranging mostly from about 9 million to 9.8 million acres.

Upland area is estimated at 9.347 million acres, up 11 percent from 8.422 million in 2015, and Pima plantings are forecast at 215,000 acres, up 35.6 percent from 159,000 acres.

Despite the expected increase, the total planted acreage, if realized, would be the seventh lowest on record, USDA said. The 2015 acreage was the lowest since the payment-in-kind farm program of 1983.

Growers in all states except North Carolina, South Carolina and Virginia are expected to increase their cotton acreage. If realized, the upland planted area in California would be a record low.

The largest regional percentage upland increase is projected in the Mid-South, up 45.7 percent to 1.435 million acres. Producers intend to cut their upland acres by 5.1 percent to 2.12 million acres in the Southeast, while increases of 11.2 percent to 5.592 million acres are foreseen in the Southwest and 17 percent to 200,000 acres in the West.

Growers in Texas, the largest cotton-producing state, intend to plant 5.3 million acres of upland, up 10.4 percent from 4.8 million acres last year, and 22,000 acres of Pima, up 29.4 percent from 17,000 acres. This would be the second-smallest cotton acreage in Texas since 2009.

John Bondurant, Memphis-based trader and Delta producer, had predicted ahead of the report that Mid-South growers likely would increase their cotton acres because of economics favoring the fiber crop.

The huge 2015 acreage of sorghum in the Delta “will almost completely go away due to poor yields last year and poor prices this year,” he said, adding that soybeans “offer almost no profit potential at current levels.”

When growers sell cotton equities at a recent new-crop value there of about 12 cents, the net of rebates, quality premiums and so forth is “probably something like 72 cents per pound,” Bondurant said. That can be “quite profitable” for high-yield farmers, he added in a Notebook report.

A lot of Delta farmers have sold their cotton pickers and arenΆt going back to cotton, heΆd pointed out previously. Producers apparently have lots of spare picker capacity, however. He said growers who still own pickers probably planted maybe 50 percent of their picker capacity last year.

The price lows coincided with USDAΆs weekly export sales report, released prior to the plantings data. All-cotton sales rose 6.1 percent from the prior week to 98,600 running bales but upland sales fell 48 percent from the four-week average to 86,400 RB.

Commitments totaled 7.594 million RB, down 2.573 million RB, or 25 percent, from a year ago. Sales were 82 percent of the USDA forecast, against 93 percent of final exports at the corresponding point last year.

New-crop sales of 35,200 RB brought 2016-17 commitments to 1,081,900 RB, up from 904,500 RB in forward sales a year ago.

Shipments of 205,800 RB boosted the 2015-16 total to 4.74 million RB, widening the gap behind year-ago exports by 127,000 RB to 1.244 million, or to 21 percent. Exports were 51 percent of the USDA estimate, compared with 55 percent final shipments a year ago.

Weekly shipments need to average roughly 248,600 RB to achieve the estimate, while sales of 90,100 RB a week would match the export forecast.

On the international scene, MexicoΆs cotton production is forecast to decrease about 4 percent in 2016-17 owing to an expected 9 percent decline in planted area, according to a U.S. agricultural attaché report.

The crop is projected at 870,900 bales. Private sources attributed the planted area decline mainly to a need to rotate with such other crops as corn and vegetables to maintain more fertile soils.

Domestic consumption is expected to increase slightly to 2 million bales and imports are estimated at 1.05 million bales. The post revised the import estimate for 2015-16 by 10 percent from USDAΆs projection to 1.07 million bales, mainly on lower production.

The Mexican government continues to support cotton growers and growth of the textile industry in general, the report said. The United States, which accounts for almost 100 percent of MexicoΆs cotton imports, is expected to remain the main cotton supplier.

Meanwhile, trend-following funds reduced their net shorts by 2,280 lots to a still large 38,208 in cotton futures-options combined during the week ended March 22, according to government traders-commitments data.

They had built their net shorts to the largest since at least 2006.

Index funds raised their net longs by 1,027 lots to 69,847, largest since September 2013, while traders with nonreportable positions cut their net shorts by 349 lots to 3,289.

Commercials sold 3,656 lots, liquidating 3,106 longs and adding 550 shorts to boost their net shorts to 28,350 lots.