* Cotton bumps against technical resistance at 84 cents
* Lower acreage, higher demand forecasts support prices
* Hefty carryover stocks limit gains
By Chris Prentice
NEW YORK, Feb 11 (Reuters) - Cotton prices inched up to a more than one-week high on Monday in reaction to forecasts that U.S. farmers will grow the smallest crop in two decades this year, but gains were limited by technical selling and concerns about record stocks.
The most-active March cotton contract on ICE Futures U.S. increased 0.25 cent, or 0.3 percent, to settle at 82.92 cents per pound in heavy trading on Monday. It was the highest closing price since Feb. 1.
Forecasts for a massive drop in U.S. plantings for the 2013/14 crop year and increasing demand failed to push cotton past last month’s seven-month high of 84 cents a lb. Gains were limited by technical resistance and by expectations for hefty carryover stocks from this year.
“People were expecting a larger (acreage) number, but the market’s getting a little tired,” said Jim Nunn, owner of Tennessee cotton brokerage Nunn Cotton.
The U.S. government on Monday estimated a 23-percent drop in cotton plantings for the 2013/14 crop year, on the heels of an even lower forecast by the National Cotton Council, which pegged sowings down 27 percent to the smallest cotton crop the United States has seen in 20 years.
At the same time, the association projected a 2.5-percent year-over-year increase in world mill use to 108.7 million bales.
Deferred futures brushed up against last month’s highs during Monday’s dealings in response to the supportive news.
May, the second-most-active contract, settled at 83.92 cents a lb, up 0.7 percent, after reaching an intraday high of 84.01. The December contract, which represents the first harvest of the next year’s crop, hit 83.98 cents before settling at 83.84 cents, up 1.1 percent from the previous session.
In addition to the technical resistance, forecasts for large global stocks at the end of the 2012/2013 crop year dampened gains.
“What the U.S. plants is only one piece of the market, and the global market is distorted by those 40 million bales sitting in China’s government reserves,” said John Robinson, a Texas A&M University professor and cotton economics specialist.
The U.S. Department of Agriculture raised its projections for China’s ending stocks to represent more than half of projected global inventories of 81.86 million 480-lb bales in its monthly crop report on Friday.
Market open interest retested a two-year high that same day, totaling more than 213,000 contracts, according to ICE data.
Trading volumes continued to be heavy, reaching well over 48,000 lots on Monday, compared to a 250-day average of under 19,000, according to preliminary Thomson Reuters data.
Speculative investors have helped cotton prices jump by more than 10 percent since the start of the year and to a seven-month high of 84 cents last month.
Those surging prices have followed two years of losses, with manmade fibers eroding demand for higher-priced cotton and global surpluses outstripping that falling demand. (Reporting By Chris Prentice; Editing by Bob Burgdorfer)