By Duane Howell
For the Avalanche-Journal

Perceptions of tightening U.S. supplies in the face of massive global stocks powered nearby cotton futures to the longest streak of higher closes in almost two years last week amid heavy bull spreading.

Spot March surged 511 points or 6.6 percent for the week ended Thursday to close at 82.89 cents, trading from 77.55 to 84 cents. At the high, March had jumped 1,028 points or 14 percent from the low for the month on Jan. 4.

May advanced 401 points to settle at 87.20 cents, July gained 218 points to 81.04 cents and December edged up 44 points to 81.04 cents.

Cash grower-to-business sales declined to 84,957 bales from 88,939 bales the previous week. Prices gained 294 points to an average of 71.98 cents, reflecting a 252-point rise to 19.25 cents in premiums over loan repayment rates. Daily price averages ranged from 68.55 to 75.15 cents.

The basis on the base quality weakened in the West Texas Plains by 161 points to 839 points off March. Estimates earlier this month indicated approximately 15 percent of the bales in West Texas remained under control of producers.

Nearby futures closed higher seven sessions in a row and nine of the last 10, with March inverting over the rest of the board. Such an inversion usually is considered a sign of supply constraints.

March filled a chart gap left to 80.56 on May 11 and closed on its highest finish since May 9. It settled just above a 50 percent retracement (82.68) of the 2012 break from 98.50 on Feb. 6 to the contract low of 66.85 on June 4.

Daily volumes jumped as high as an estimated 63,800 lots in futures and 28,500 lots in options, compared with daily averages this month of 24,400 and 10,100 lots, respectively.

With the U.S. 2012-13 supply pegged At 20.37 million bales, export commitments already at 9.95 million bales as of Jan. 10 and domestic mills requiring 3.4 million bales this season, only around 7 million bales would be left for sale prior to new-crop movement, estimates indicated.

But continued gains in futures prompted concerns about possible buy-backs and cancellations of U.S. export commitments accompanied by a shift to lower-priced foreign growths.

Differences in the balance sheets for China and the rest of the world have continued in the limelight. Relatively low prices outside China have stimulated a lot of buying interest, analysts have pointed out, even including import demand from China, which is projected to have about half the world stocks.

While mill use in China is forecast down 6.6 percent from last season and 22.8 percent from two years ago, cotton consumption in the rest of the world is projected at the highest in five years at 70.56 million bales.

A wide gulf separates the prices. ChinaΆs Zhengzhou March futures closed Thursday at the equivalent of 147 cents per pound, up 0.9 percent from a week earlier. The relatively low prices outside China have attracted a lot of buying interest, analysts noted, even including import demand from China.

Trade data from China contributed — among an array of factors — to the U.S. futures rally, one market specialist said.

China imported 136,620 metric tons of cotton yarn during December. This was the highest monthly total on record. China is the worldΆs largest cotton yarn importer as well as the largest raw cotton importer and consumer. Cotton yarn imports for calendar 2012 climbed 87 percent from the prior year to 1.277 million tons, also a record high.

Reports also have shown ChinaΆs synthetic fiber production grew at a double-digit pace in 2012 and hit another record high. The growing market share of man-made fibers has aroused much concern in cotton circles.

Looking ahead, Informa Economics, Memphis-based consulting firm, has projected U.S. all-cotton plantings at 10.277 million acres, down 16.6 percent from 12.32 million acres in 2012, trade sources said.

The Informa survey pegged upland plantings at 10.040 million acres, down from 12.077 million acres seeded last year. Upland plantings are expected to fall 15 percent in Texas, the leading cotton state, and 19 percent in No. 2 Georgia.

Earlier, a survey by Cotton Grower magazine put intentions at 9.731 million acres, down 21 percent from 2012. Survey respondents cited higher input costs and lower cotton prices as the main reasons for the cutback.

The National Cotton Council will release results of its annual planting intentions survey during the joint meeting of program committees at the councilΆs annual meeting on Saturday morning, Feb. 9, in Memphis.

Then the prospective plantings report from USDAΆs National Agricultural Statistics Service is scheduled for release March 30.

Intentions are likely to remain a moving target until right up to planting time, influenced by by such considerations as market fluctuations and weather conditions.

On the 2012 crop scene, U.S. all-cotton classing slowed to 338,957 running bales during the week ended Jan.17 to bring the total for the season to 16,056,254.

This is roughly 16.54 million statistical bales, about 97 percent of the downwardly revised January crop estimate. Upland classing declined to 306,227 bales from the prior weekΆs 377,173 bales, raising the seasonΆs total to 15,398,652. Tenderable cotton totaled 58 percent for the week and held at 58.5 percent for the season.

In futures-options combined, trend-following funds bought 2,862 lots during the week ended Jan. 15 to boost their net long position by 10 percent to 31,547 lots, Commodity Futures Trading Commission data showed.

Index funds bought a net 2,485 lots, raising their net longs to 70,715 lots, while traders with non-reportable positions bought 738 lots to hike theirs to 6,360 lots.

Commercials sold a net 6,085 lots, adding 7,041 shorts along with 955 longs, which lifted their net short position to 108,621 lots.