Unable to make further progress to the downside, cotton futures have rallied to a 10-session high settlement on light turnover in a holiday-shortened trading week.

Benchmark December advanced 173 points from the prior calendar weekΆs close to settle Wednesday at 85.74 cents, its highest finish since June 19 after a second quarter loss of 3.8 percent. March gained 248 points to settle at 84.96 cents ahead of the Independence Day holiday on Thursday.

December played tag with its 50-day moving average, closing above it on Monday for the first time since June 19, finishing below it on Tuesday on improved crop ratings, and settling back above it on Wednesday amid dollar index weakness and decertification of 25,000 bales.

Cash market demand appeared lackluster after scale-down mill buying had helped to underpin prices as the market rallied from the prior weekΆs low of 83.05 cents, basis December, on June 25. December has closed on the plus side five of the last six sessions.

Despite the largest decertification since May 3, certified stocks grew 26,089 bales on the week to 613,354 bales, with 59,472 bales awaiting review. While the fate of stocks left after the July delivery period ends has remained uncertain, conjecture has persisted that a batch likely will be applied to existing sales.

July delivery notices thus far have totaled 2,462 lots or 246,200 bales, including some by the trade house that also is the major stopper. Last trading day for the July contract is Tuesday.

Support stemmed partly from the long-awaited report showing U.S. growers planted 10.251 million acres of all cotton, down 16.8 percent from 12.076 million acres seeded last year and the low end of most expectations. Upland plantings fell to 10.025 million acres from last yearΆs 12.076 million and Pima plantings to 226,000 acres from 238,000.

Plantings in drought-plagued Texas are estimated at 5.7 million acres, down 13 percent from last yearΆs 6.55 million but up 2.4 percentage points to 55.6 percent of the U.S. cotton area. Growers planted 3.7 million acres on the High Plains, down 11.5 percent from last year, and seeded 995,000 acres in the adjoining Rolling Plains, down 16.1 percent.

Combined, the 4.695 million acres planted in the Texas High and Rolling Plains, down 12.5 percent from last year, accounted for 82.4 percent of the Texas cotton area and 45.8 percent of the U.S. acreage.

Regionally, upland plantings fell 8.1 percent in the six-state Southeast to 2.525 million acres, 36 percent in the five-state Mid-South to 1.3 million, 14.9 percent in the three-state Southwest to 5.88 million and 17.3 percent in the three-state West to 320,000.

Uncertainty about how China will manage its huge stockpile of strategic reserves has contributed along with concerns over global economic health to capping cotton rallies.

In a related vein, a series of reforms initiated by the new administration in China designed to open up the economy to private investment and speed up urbanization likely will accelerate reduction of the cotton area, the International Cotton Advisory Committee said.

The PeopleΆs Bank of China in June said the government was willing to tighten monetary policy to achieve more stable economic growth. This had an immediate impact on spinners who are now reducing purchases from the reserve, which requires payment upon delivery, and expanding imports with 90-day letters of credit, ICAC said.

“All in all, ChinaΆs cotton policy remains the driver of world cotton prices,” the secretariat added.

ChinaΆs national cotton reserve is estimated at close to 9 million tons (41.34 million 480-pound bales) as of the end of June, ICAC said, and may be down to 8 million tons (36.75 million bales) by the end of July. Purchases into the reserve will resume in September as the harvest begins.

With the recent acknowledgement of the market distortion created by its national cotton reserve programs, Chinese policymakers plan to experiment with a subsidy in Xinjiang, the top cotton-producing province.

At the provincial level, in an effort to stop the rapid decline of cotton planting in Hebei, cotton farmers were paid a direct subsidy in April, ICAC said.

Since 2010-11, world cotton production has exceeded consumption. While 2012-13 global ending stocks are expected to be approximately split evenly between China and the rest of the world, China is projected to hold close to 60 percent of the world stocks by the end of 2013-14, ICAC said.

In its updated 2013-14 supply-demand estimates, converted to 480-pound bales, the ICAC shaved its world carryout forecast by 590,000 bales from a month ago to 85.02 million, up from 82.13 million in 2012-13.

World crop prospects dipped 640,000 bales to 114.60 million and mill use edged up 100,000 bales to 111.75 million, down from the prior seasonΆs 121.21 million bales and up from 109.22 million bales, respectively.

Global trade is estimated up 830,000 bales on the month to 42.35 million, down from 44.97 million in 2012-13.

Meanwhile, U.S. crop conditions improved during the week ended June 30, with good to excellent up four percentage points to 47 percent and poor to very poor down six points to 17 percent. A year ago, good to excellent also stood at 47 percent and poor to very poor was 18 percent.

Conditions improved in Alabama, Arkansas, Georgia, Kansas, Mississippi, Missouri, Texas and Virginia; declined in Arizona, Oklahoma and South Carolina; and held steady in California, Louisiana, North Carolina and Tennessee.

Good to excellent cotton in Texas increased six points to 31 percent, fair rose four points to 42 percent and poor to very poor fell 10 points to 27 percent.

Squaring nationally advanced 14 points to 37 percent, 10 points behind a year ago and eight points behind the 2008-12 average, while cotton setting bolls at 6 percent was behind 13 percent a year ago and 11 percent on average.