By Duane Howell

Trading nervously as the May delivery period loomed, cotton futures advanced to nearly a four-week peak in old-crop contracts last week, while new-crop prices climbed to the highest in more than 10 months.

Benchmark July gained 82 points for the week ended Thursday to close at 93.20 cents after posting a high of 93.52 cents, its highest intraday price since March 31. Maturing May jumped 249 points to 92.66 cents. December, which has closed higher five of the last six sessions, rose 83 points to 82.77 cents, a new high close since June.

Not surprisingly, no notices were issued on first notice day for May deliveries on Thursday. May traded at discounts to July as wide as 262 points in April, well beyond full carry, after spurting out to premiums up to 221 points in March.

The wide carry afforded holders of deliverable stocks an opportunity to roll May positions forward. On Wednesday, the May-July spread traded from a 223-point May discount to a 43-point May premium and closed at a 26-point inversion. Then it closed Thursday at a 54-point May discount.

With last-minute mill pricing, liquidation and large exchanges-for-physicals and swaps, MayΆs futures open interest plunged by 5,091 lots on Wednesday to only 752 lots ((75,200 bales). Certificated stocks continued to grow, rising to 296,322 bales, with 15,895 bales awaiting review.

Cash grower-to-business sales increased to 2,384 bales on The Seam from 1,337 bales the previous week. Prices fell to an average of 74.89 cents from 79.14 cents, reflecting a decline to 26.03 cents from 30.81 cents in premiums over loan repayment rates.

Larger-than-expected U.S. weekly export sales contributed to old-crop support and the intensifying Texas High Plains drought helped to support new-crop prices.

Precipitation of 32.91 inches at Lubbock from October 2010, when the drought began, through March 2014 of 32.91 inches ranks as the driest 42-month or 3.5-year period on records going back to 1911, according to the National Weather Service. This beat out the devastating dry period ended April 30, 1955, by an astonishing 8.28 inches.

After 2.57 inches of rainfall on Oct. 21-22, 2010, the deficit from normal began increasing and continues to do so. This drought also is drier than a comparable period in the Dust Bowl era of the 1930s.

U.S. all-cotton export sales for this season totaled 132,300 running bales for the week ended April 17, up 39 percent from the prior week and the largest since Feb. 27. Upland net sales rose 46 percent on the week to 124,100 bales, with China booking 105,100 bales or 85 percent. Those were the largest weekly sales to China since Jan. 23.

Commitments of upland and Pima combined climbed to 9.769 million bales, 94 percent of the USDA export forecast, compared with 97 percent of final shipments at the corresponding point last year. The margin behind year-ago bookings widened 113,000 bales to 2.483 million or to 20 percent.

Shipments slowed to 237,500 bales, down 20 percent from the previous week and the slowest since Jan. 9 but still above the pace needed to reach the estimate. Exports for the season reached 7.736 million bales, almost 75 percent of the estimate.

Exports trailed year-ago shipments by 1.572 million bales, or 17 percent. To achieve the forecast, shipments need to average roughly 188,800 bales a week, while weekly sales averaging around 43,600 bales would match the export projection.

Net all-cotton sales for shipment next season fell to 19,700 bales, a 13-week low and down from 135,800 bales the week before. Commitments for 2014-15 edged up to 1.501 million bales, up 132,000 bales from forward bookings a year ago.

Some estimates have suggested that roughly two-thirds of the 2014-15 bookings will be supplied from existing stocks during the first 90 days of the new marketing year beginning Aug. 1, prior to volume movement of the 2014 crop. Additional cotton also would be needed for domestic mills.

On the U.S. crop scene, planting inched up a percentage point to 9 percent complete during the week ended April 20, a point behind a year ago and two points below the five-year average.

Cotton was 12 percent planted in Texas, even with a year ago but three points behind average. In Georgia, the No. 2 cotton state behind Texas, growers had seeded 1 percent, also even with 2013 but six points below average.

Planting advanced five points to 90 percent in drought-stricken California and 20 points to 55 percent in Arizona, up from 45 percent and 42 percent, respectively, on average. It was just getting started in most other states, with Louisiana lagging the most at 1 percent, 16 points behind average.

On the international scene, the U.S. agricultural attaché reported from Canberra that adverse seasonal conditions are expected to reduce AustraliaΆs cotton production and exports in 2014-15.

With China remaining pivotal in the world cotton market, prices for Australian cotton exports are forecast to decline by 15 percent as China gradually reduces its stockpile, the report said. ChinaΆs stockpile is estimated at 61 percent of record high global stocks.

The attaché estimated AustraliaΆs production at 4.128 million bales, down from 4.31 million in 2013-14, and exports at 4.11 million, down from 4.475 million.

Australia, the worldΆs third-largest cotton exporter behind the United States and India, ships about 95 percent of its domestic crop to foreign customers, mainly to China, Indonesia and Thailand. China has accounted for about three-fourths of the exports.

Cotton is predominantly irrigated and produces the worldΆs highest yields, helped also by the use of genetically modified varieties and effective management.

Australia has developed new strains of cotton to suit local conditions, the report said. The cotton research and development program is funded by cotton growers who pay a compulsory $2.25 per bale, matched by the Australian government.