A quick rebound into the prior trading range followed a collapse and downside breakout in cotton futures last week.

The market finished mixed for the week ended Thursday, with spot May down 147 points to 91.53 cents, most-active July up 92 points to 90.72 cents and new-crop December flat at 88.31 cents. First notice day for May deliveries is Tuesday.

July plunged to 86.55 cents on Monday, lowest since Dec. 22, rallied 570 points to 92.25 cents on Wednesday and closed Thursday in the upper third of the range, still a bit below its declining 50-day moving average.

What appeared to have been panic short-covering in May the previous week against index fund rolling of longs forward may have culminated with a big overnight drop in MayΆs open interest reported on Thursday.

MayΆs open interest fell 6,790 lots or more than 50 percent to 7,396. This stemmed in large measure from 1,866 lots in “exchange for physicals” and 2,477 in “exchange for swaps.” The swaps exchange is more of a financial transaction and often involves financing of hedges.

Mike Stevens, independent cotton analyst of Mandeville, La., said the big drop in his opinion “goes a long way toward reducing or defusing the possibility of a squeeze on the May contract.”

Cash trading rose to 4,510 bales from 2,278 bales the previous week on The SeamΆs grower-to-business exchange. Prices advanced 322 points to average 81.76 cents, reflecting a 199-point gain to 28.83 cents in premiums over loan redemption rates.

Traders viewed a slight loss in U.S. 2011-12 export commitments as neutral in that no large cancellations were reported in a week in which spot futures advanced four straight days for a period gain of 446 points.

All-cotton sales commitments for delivery this season fell 6,700 running bales during the week ended April 12, while new-crop sales rose to 41,800 bales. Commitments for 2011-12 remained about 4 percent above USDAΆs latest estimate.

Quickened all-cotton shipments of 277,000 running bales boosted exports for the season to 7.471 million, 68 percent of the forecast. Shipments averaging roughly 239,100 running bales a week now are needed to reach the estimate.

Outstanding optional origin commitments for 2011-12 of 1.15 million running bales included 1.077 million or about 94 percent to China. These can be either U.S. cotton or foreign growths.

Major revisions by IndiaΆs Cotton Advisory Board would seem to indicate the worldΆs second-largest cotton producer and exporter is unlikely to allow more exports this season.

The CAB slashed the countryΆs 2011-12 ending stocks estimate to 2.51 million bales (of 170 kilos or 375 pounds) from 5.53 million foreseen earlier. Beginning stocks fell to 3.91 million bales from 4.83 million after final 2010-11 exports were hiked to 7.8 million from 6.88 million.

The new carryout estimate of 1.96 million in 480-pound bales is in stark contrast to USDAΆs revised forecast earlier this month of 9.55 million. Old-crop revisions resulted in USDA raising its beginning stocks estimate to 10.85 million bales, against 3.055 million in 480-pound bales now tallied by the CAB.

Other CAB estimates (all 170 kilos) raised production to 34.7 million bales from the previous 34.5 million, cut consumption to 25.2 million bales from 26 million, boosted exports to 11.5 million bales from 8.4 million and left imports at 600,000 bales. The carryout now is projected at only 10 percent of domestic mill use.

India also cleared 1.9 million bales in outstanding sales registered by March 2 for shipment by May 5.

Rumors again surfaced that China soon may issue a supplemental import quota of a million metric tons or 4.59 million bales. Initial demand likely could be satisfied by consignment stocks in Chinese warehouses in the duty free zone, an analyst said. ChinaΆs huge purchases for its national reserves have restricted mill access to domestic supplies.

On the U.S. crop scene, cotton planting maintained a fast pace during the week ended April 15, advancing four percentage points to 13 percent completed, up from 8 percent from a year ago and 9 percent on average.

Planting was most advanced in Arizona at 38 percent completed, up nine points from average. Progress in Texas rose three points to 18 percent, against 12 percent a year ago and 13 percent on average, and reached nine percent done in Georgia, up eight points from the average.

Growers in California had planted only 10 percent, a whopping 36 points behind average because of wet weather. Progress elsewhere was ahead of state averages except in Kansas, Oklahoma and Tennessee, which usually havenΆt planted any cotton at this time of year.

Rising soil temperatures after an unseasonably warm winter and early spring in much of the Cotton Belt spurred planting. This also is expected to bring a surge in overwintering insects, entomologists have warmed.

In other developments, ChinaΆs decision to widen the yuanΆs trading band isnΆt expected to have strong near-term impact on cotton and commodity trade in general, analysts said. However, expectations for a long-term appreciation of the currency — if that indeed is the case — still could underpin imports.

Beijing announced it would widen the yuanΆs daily trading band against the U.S. dollar to 1 percent above and below the central parity, a daily reference exchange rate, from 0.5 percent previously.

This was considered a major move to further liberalize the exchange-rate regime and make the yuan more market-oriented.

An appreciating yuan generally encourages imports as it allows for more purchases of dollar-denominated commodities, analysts said. The reverse is true for a depreciating yuan, which bodes well for exports.

The band-widening could give the currency more room to appreciate, an analyst said, and costs of agricultural imports could be lowered. In turn, this could make ChinaΆs cotton goods more expensive abroad.