NEW YORK (Dow Jones)--Cotton prices corrected lower Wednesday as traders
calculated upcoming supplies from an expected bumper crop. Still, near-term
supplies could be tight.

Nearby cotton for October delivery settled 0.88 cent, or 1%, lower at 80.57
cents a pound on ICE Futures U.S. The most actively traded December contract
ended 0.39 cent, or 0.5%, lower at 76.31.

Those contracts backed off of the previous session's gains as traders bought
and sold different cotton contracts according to the time that they need the
physical fiber. Exchange stocks, which are deliverable against futures
contracts in the corresponding months, are at low levels. This makes it
unlikely that those supplies, which act as a second source of the fiber aside
from the cash market, will be there for willing buyers.

ICE daily cotton stocks decreased by 2,490 500-pound bales Tuesday to total
50,825 bales, according to exchange data.

"To see [exchange] stocks at 50,000 bales is pretty positive" from a bullish
perspective, said Keith Brown, principal of Keith Brown & Co. in Moultrie, Ga.
"There's still a very strong undertone of bullishness out there."

Cotton is in high demand as textile consumption rebounded in the last year in
tandem with the world economy. Despite the U.S. Department of Agriculture's
expectations for a 50% year-on-year increase in the U.S. cotton harvest this
fall, there is speculation that much of that cotton has already been sold.

However, the futures market may have surpassed its upside trajectory,
analysts said. Nearby months are showing strong demand through atypical price
inversion. October prices are higher than December, and December is stronger
than March, indicating buyers are willing to pay more for cotton sooner than to
wait for prices to relax later when there is more supply in the marketing
channels.

"With no other outside factors or today's fundamentals, the market simply
corrected," said Sharon Johnson, senior cotton analyst at First Capitol Group
in Atlanta. "We really should not be at an inverse with four months to go
between first notice in December."

ICE cotton open interest--the number of active positions left at the end of
the session--decreased by 670 positions Tuesday to total 164,498, according to
the exchange.

Volume was estimated 11,773 lots. In options, approximately 7,476 calls and
5,730 puts traded on the floor, according to exchange data.

Close Change Range
Oct 80.57 -0.88 80.49-81.50
Dec 76.31 -0.39 76.11-77.29
Mar 74.62 +0.29 74.27-75.34