“Macro” developments, capped by ChinaΆs first interest rate cut in nearly four years, along with technical considerations spurred massive short-covering and powered a big reversal after cotton futures had fallen to back-to-back new contract lows last week.

The technically oversold market exploded the daily limit two sessions in a row in spot July and most-liquid December to finish the week ended Thursday with gains of 234 points to 73.89 cents and 193 points to 72.28 cents, respectively. March advanced 328 points to 73.63 cents.

July vaulted 779 points or 11.79 percent from its life-of-contract low on Monday, a 28-month low for the front-month delivery, and December leaped 767 points or 11.88 percent from a 31-month low for the third position contract.

The performance suggested the market has established at least an interim low, though analysts say whether it is a terminal low remains to be seen in view of no visible shift in fundamentals.

Grower-to-business cash sales climbed to 1,807 bales from only 134 bales the prior week on The Seam. The cotton changed hands on prices averaging 63.72 cents, up 292 points, reflecting a 349-point gain to 11.57 cents in premiums over loan repayment rates. Daily price averages ranged from 53.37 to 65.67 cents and premiums from 2.59 to 13.21 cents.

ChinaΆs central bank cut its benchmark lending rate by a quarter percentage point to 6.31 percent. This followed a string of measures in recent weeks intended to reverse a sharp economic slowdown and was viewed by many as a strong signal of the governmentΆs commitment to growth.

The move contributed to sharp gains in agricultural commodities. China is the worldΆs largest cotton consumer and importer and has booked 53 percent of the U.S. 2011-12 export commitments.

U.S. weekly export sales offered support at 136,100 running bales for delivery this season and 69,700 running bales for next season. The USDA data reinforced expectations for an increase in the 2011-12 export forecast in the updated supply-demand report on Tuesday.

Export commitments stand at 12.266 million running bales for 2011-12, about 11 percent above the USDA forecast. Weekly shipments of 247,300 running bales lifted exports for the season to 9.55 million, about 86 percent of the projection.

Old-crop supplies will be needed for domestic mills and also for some 2012-13 export commitments during about the first three months of the new marketing year before new-crop cotton begins to move in volume.

On the U.S. crop scene, cotton rated good to excellent fell three percentage points to 54 percent during the week ended June 3, USDA reported, while fair also dropped three points to 37 percent and poor to very poor rose six points to 9 percent.

Conditions declined the most in top-producing Texas, with good to excellent down seven points to 47 percent, fair down four points to 40 percent, and poor to very poor up 11 points to 13 percent. Ratings in Georgia held essentially even at 56 percent good to excellent.

The national crop index fell 3.3 points to 98.5 (100 is approximately “normal”). Recent rains in the Texas High and Rolling Plains may improve the Lone Star State rating in the next report.

U.S. planting advanced 11 points to 87 percent completed, compared with 83 percent on average. It was nearing completion in many states except in the Southwest. Texas growers had planted 81 percent, up 17 points on the week and from the average of 77 percent.

Squaring reached 11 percent nationally, up from 7 percent on average. Arkansas led at 43 percent, up from the average of just 3 percent.

Traders took note of new estimates by the International Cotton Advisory Committee showing ending stocks in 2012-13 up 1.2 percent from a month ago to 14.46 million metric tons (66.41 million 480-pound bales).

This is up 9 percent from an upwardly revised 13.268 million tons (60.94 million bales) now estimated for this season and would represent 61 percent of global consumption, the highest stocks-to-use ratio since 1998-99, according to ICAC estimates.

World production in 2012-13 is forecast down 7 percent from 2011-12 to 25.10 million tons (115.28 million bales) following the plunge in cotton prices this season, the ICAC secretariat said. Global cotton use is projected to increase by 3 percent to 23.9 million tons (109.77 million bales), driven by improving economic growth and lower cotton prices.

The ICAC thus sees world production still exceeding mill consumption by some 5.51 million bales next season.

Global trade is expected to decline by 8 percent to 8.1 million tons (37.2 million bales). Chinese imports could fall by 28 percent to 3.3 million tons (15.15 million bales, while imports by the rest of the world could increase by 15 percent to 4.8 million tons (22.05 million bales), boosted by lower cotton prices and increased consumption, ICAC said.

Three-fourths of the projected increase in global stocks in 2011-12 is in China, mostly within the national reserve, ICAC said. A portion of the reserve might be sold before arrival of the new crop to rotate stocks.

China has announced a slightly higher minimum support price for 2012-13 and is expected to buy part of the new crop. This suggests the size of the national reserve may increase further, ICAC said.

Meanwhile, speculators boosted their net short position by a full point to 5.8 percent of the open interest during the week ended June 1, according to the exchangeΆs spec-hedge data. This provided fodder for the ensuing bull romp.

The specs owned 50.4 percent of the shorts, down 0.2 of a point, and 44.6 percent of the longs, up 1.2 points. They added 5,228 shorts and 2,548 longs, increasing their net shorts by 2,680 lots to 11,782. Their outright holdings totaled 102,280 shorts and 90,498 longs.

Commercials increased their longs by 8,384 lots to 112,366 and their shorts by 5,704 lots to 100,584.