Uncertainties about ChinaΆs policy on its reserve stocks weighed on sentiment as cotton futures finished with fractional losses last week ahead of USDAΆs updated supply-demand estimates.

Spot March eased off 19 points for the week ended Thursday to close at 75.20 cents, while May dipped 18 points to 76.04 cents, July slipped 12 ticks to 77.12 cents and December fell 38 points to 79.09 cents.

March did manage a 15-point gain from the close on Jan. 4 when it bounced to a small weekly gain after falling to within 27 points of a 50 percent retracement (73.45) of the 731-point move from the Nov. 9 low — a supply-demand report day — at 69.79 to the Dec. 27 high at 77.10 cents.

Traders adjusted positions ahead of the January supply-demand report, which was scheduled for release Friday at a new time of noon eastern and 11 a.m. central.

Cash grower-to-business trading quickened to 29,980 bales from 24,781 bales the previous week. Prices dipped 14 points to an average of 67.02 cents, reflecting a 62-point loss to 15.93 cents in premiums over loan repayment rates. Daily price averages ranged from 65.86 to 69.40 cents.

The China Cotton Index has continued to climb, reaching 19,250 yuan per metric ton or 138.90 cents per pound.

Talk has continued to circulate that China soon may begin to release some of its stocks by requiring mills to take three bales from the reserve at 19,000 yuan per metric ton or the equivalent of roughly $1.37 per pound for every bale they then would be allowed to import.

Although this would be cheaper than the 20,400 yuan per ton (the equivalent of $1.47 a pound) the reserve has been paying to farmers, it still would be far above international values, a trade analyst observed.

“Some traders fear that such a 3:1 ratio scheme may have a negative market impact but we donΆt believe that to be the case,” the analyst added. “There may be an initial kneejerk reaction when the new policy is announced but what matters in the long run is that imports are likely to continue, albeit at a reduced rate.”

This is important for international prices, he said, because if 2013-14 plantings in the rest of the world were to drop by 15 percent and demand to increase by a modest 2 percent, then production and mill use would be at about the same level outside China.

Thus if China continues a net importer, even if just 7 million to 8 million bales a year, then the balance sheet in the rest of the would tighten considerably, he added.

On the production outlook, widespread, “bonus” rains boosted spirits on the Texas High Plains, where growers planted 64 percent of the stateΆs upland cotton acres in 2012 and 35 percent of the U.S. acreage.

Nearly half of the 38 National Weather Service reporting sites on the Plains got an inch or more. All reported receiving moisture in the 24-hour period to 8 a.m. Thursday. Amounts ranged from 0.42 of an inch to 1.79 inches.

LubbockΆs 0.84-inch topped the date record of 0.53 set in 1949. The total for January of 0.85-inch was 0.17-inch above normal for this typically dry month.

Much more precipitation will be needed before the growing season to replenish depleted soil moisture following the driest combined back-to-back years on records going back to 1911.

The year 2012 went into the record books as the warmest ever at Lubbock — though the summer wasnΆt as hot as in 2011 — with an average high of 77.9 degrees and average low of 49.2 degrees, 3.6 and 2.2 degrees above normal, respectively.

And while precipitation amounts improved from 2011, they remained below the long-term average for most locations and were not sufficient to bring improvement in drought conditions, the Weather Service office at Lubbock says in a 2012 weather review.

Precipitation in 2012 totaled 11.43 inches, 7.69 inches below normal. This followed the all-time low of 5.86 inches in 2011, 13.26 inches below normal. The combined 17.29 inches ranked below the other driest two-year spans of 20.03 inches in 1933-34 and 20.88 inches in 1917-18.

Lubbock recorded only one day in 2012 with an inch or more of precipitation — on Aug. 17, when a thunderstorm brought 1.16 inches. An increase in the frequency and intensity of dust storms culminated in the longest duration sandstorm in decades on Dec. 19.

On the demand side, expectations for a boost in the U.S. export estimate in the USDA supply-demand report were reinforced by sales for the holiday-marked week ended Jan. 3. Net all-cotton sales came in at the top end of expectations at 204,200 running bales for shipment this season, up from 197,800 bales the prior week.

Upland net sales of 196,500 bales were up 9 percent from the previous week but down 27 percent from the prior four-week average. China bought 69,400 bales of upland or 35 percent, while Turkey booked 44,500 bales and 23,100 bales went to Indonesia.

All-cotton shipments jumped to 272,200 bales from 190,400 bales, with upland exports of 256,700 bales up 41 percent from the week before and 45 percent from the prior four-week average.

Meanwhile, ChinaΆs 2012-13 crop is estimated at 7.22 million metric tons (33.16 million 480-pound bales) by Beijing Cotton Outlook, sources said, up from below 7 million tons (32.15 million bales) previously.

The USDA last month estimated ChinaΆs output at 31.5 million bales, down 5 percent from a year earlier, and the harvested area down 7 percent from a year ago at 5 million hectares (one hectare equals 2.471 acres).

An initial BCO estimate of intended 2013-14 cotton plantings in China — taken from a national sample survey in 13 key areas — was reported at 4.611 million hectares or about 11.39 million acres, down almost 5 percent from the groupΆs revised 2012-13 area.