Building on the week's rally, speculative fund buying pushed cotton futures on the Intercontinental Exchange (ICE) to a fresh one-year high on Wednesday as the value of the U.S. dollar dropped and equities rallied. Cotton also found underlying support from continued rains that delayed the 2009 U.S. cotton harvest in the Southeast and Delta regions.

As the harvest season moves forward, the already late U.S. crop continues to hit roadblocks as weather prevents harvest. According to USDA data, only 12 percent of the entire U.S. crop had been harvested by Oct. 12, up from 10 percent the previous week but down from the 29 percent average.

In the Southeast, soils already were saturated when rain this week caused flash flooding in some areas. Cases of boll rot, disease and seed sprouting already have been witnessed in some fields in Alabama and Georgia, and additional rainfall will only make conditions worse. Wet conditions continued in the Memphis Territory where picking was at a standstill this week. Many bolls at the top of the plants have yet to open due to the cool, wet weather this fall, and growers there will have the added produc- tion cost of applying chemicals to force boll maturity.

Meanwhile, defoliation and harvesting continues on the High and Rolling Plains of Texas under mostly open skies. Scattered thunderstorms were reported in some areas, but unseasonably warm weather has allowed producers to proceed at a fairly steady pace.

Outside the U.S., word now is starting to circulate about problems in the cotton producing areas of China due to an overabundance of rainfall. Trade organizations within the country have estimated as many as 2.0 million bales of production may have been lost with the quality damage representing a multiple of that figure. The situation could lead to larger Chinese imports than the 8.0 million bales USDA currently estimates.

"The big question is where all these exports will come from this season," a cotton market observer said. "The U.S. already has a relatively small crop with mixed grades and can only help to fill the gap in supply."

It appears merchants now are trying to secure sizeable quantities of high grade cotton in India and Uzbekistan as they fear there will be a shortage of "desirable" cotton in the world this season.

"With the Chinese and Indian crops in question, the effects of the declining Delta crop will be felt even more acutely," a trader said. "Just as the economies of the world are starting to firm up, the supply side is shaky."

In other news, USDA reported net export sales of U.S. cotton totaled 58,000 bales in the week ended Oct. 8. The figure was a 37 percent decline from the previous week and 16 percent lower than the four-week average. China, Turkey, Japan, and Thailand were the week's top buyers. Net sales of 27,600 bales for delivery in 2010-11 were primarily for Mexico and El Salvador.

Export shipments were down one percent from the previous week at 213,500 bales but were 25 percent higher than the fourweek average. Primary destinations were Turkey, China, Mexico, and South Korea.

On the spot cotton scene, more new-crop cotton now is becoming available as producers in Texas, Oklahoma, and Kansas sold 4,594 bales online compared with 776 bales the previous week. Average prices received by producers ranged from 57.74 to 61.05 cents per pound.