By Duane Howell

Frustrating both bulls and bears, cotton futures have remained unable to sustain much momentum in either direction.

Benchmark December dipped 53 points for the week ended Thursday to close at 85.43 cents, just above the midpoint (85.08) of the rally from the June 25 low of 83.05 to the July 11 high of 87.11 cents.

December slipped to a 10-session low on the heels of slow U.S. weekly export sales for both crop years, but bounced to finish higher for the day and again near the middle of a multi-month range from 81.71 to 89.56 cents. March, which spent Wednesday within a mere 38-point range, slipped 68 points for the week to settle at 83.58 cents.

“ItΆs been a long time since I can remember a period where cotton futures have been trapped in a range this narrow for this long,” commented Jobe Moss, veteran broker with MCM Inc. in Lubbock. “It truly reflects the general apathy of the market right now.”

Certificated stocks continued to decline, falling to 71,848 bales from 623,467 bales as of July 1. Cotton in deliverable position has fallen to the lowest since early December.

Net U.S. old-crop export sales of all cotton of 32,300 running bales during the week ended July 25 nudged 2012-13 commitments up to 13.627 million, up 933,000 bales or about 7 percent from a year ago and about 106 percent of USDA estimate. A year ago, commitments were about 112 percent of final exports. Outstanding 2012-13 sales declined to 1.098 million RB.

Nearby tightness of available cotton rather than weak demand has been largely blamed for anemic sales along with a late new crop of uncertain size and quality. Achieving USDAΆs July crop forecast of 13.5 million bales may be difficult, some respected cotton analysts say.

All-cotton net sales of 50,000 bales for shipment in the marketing year that began Aug. 1 brought 2013-14 commitments to 2.295 million, widening the gap behind forward sales a year ago to 609,000 bales.

The new-crop commitments were about 22 percent of the latest USDA projection, compared forward sales a year ago of about 23 percent of the current 2012-13 export estimate.

All-cotton shipments of 103,200 running bales lifted exports for the season to 12.528 million, narrowing the lead over exports a year ago by 207,000 bales to 1.243 million or to 11 percent.

The USDAΆs 2012-13 export estimate of 13.3 million 480-pound statistical bales is up 13.6 percent from the previous season. Shipments have reached about 97 percent of the USDA forecast, against 99 percent of final exports at the corresponding point the prior year.

With six days left in the 2012-13 marketing year, roughly 373,000 running bales remained to be shipped to achieve the USDA forecast. Exports thus appeared likely to fall short of the estimate.

U.S. crop conditions improved during the week ended July 28, with good to excellent up a percentage point to 45 percent, fair also up a point to 33 percent and poor to very poor down two points to 22 percent.

The DTN cotton condition index improved to 103 from 94 a week earlier and drew even with a year ago. This was up from the low for the season of 90 as of July 14.

Ratings rose in Texas as good gained six points to 28 percent, poor dropped two points to 19 percent and very poor slid four points to 13 percent. The DTN index for Texas climbed to 59 from 37 a week earlier but was down from 68 a year ago.

Conditions also improved in Arizona, Kansas, Oklahoma, Tennessee and Virginia; held steady in Louisiana, Mississippi and Missouri; and declined in Alabama, Arkansas, California, Georgia and the Carolinas.

Squaring advanced 12 points to 89 percent, down from 93 percent a year ago and slightly behind the five-year average of 90 percent, while cotton setting bolls also expanded 12 points to 39 percent, 18 points behind last year and 17 points behind average.

Producers on the Texas High Plains restarted irrigation wells as hot, sunny weather dried fields after recent rains.

Reports indicated around 10 percent of the planted dryland acres made stands in the Lubbock classing office territory and 3 percent to 5 percent in the Lamesa classing area. Three days of cloudy weather had caused 5 percent to 20 percent natural square shed.

Earlier, Joe Nicosia, global head of cotton at Louis Dreyfus Commodities B.V., said on the Ag Market NetworkΆs conference call that cotton prices in the new marketing year will be driven by ChinaΆs cotton policy and lower U.S. inventories.

ChinaΆs current reserve-building program is unsustainable, he said at the networkΆs annual program in New York. ThereΆs a good chance that ChinaΆs cotton policy may be changed in 2014-15, he said.

Conjecture has circulated following recent international conferences in China and New York that China may shift at some point to a program featuring a direct cotton subsidy. With December 2014 trading around 78 cents, the market apparently is pricing in some kind of policy change.

Nicosia advised growers not to carry cotton through a market inversion. Doing so, he said, could mean losses not only in value but also through accumulated storage and interest costs.

But this “doesnΆt mean you canΆt be bullish,” he said. “If you want to be bullish due to tight projections of U.S. stocks for 2013, sell your cotton and buy a call.”

Meanwhile, trend-following funds bought a net 294 lots in futures-options combined during the week ended July 23 to nudge their net longs up 0.5 percent to 57,349 lots.

Index funds bought a net 89 lots, inching their net longs up to 70,358, while traders with non-reportable positions bought 1,166 lots to boost theirs to 7,987 lots.

Commercials sold 1,549 lots, adding 1,491 shorts and liquidating 58 longs to hike their net shorts to 135,694 lots.