NEW YORK (Dow Jones)--ICE Futures U.S. cotton soared to near 17-month highs
Friday as traders worked to buy their way into the bullish side of a market
with tight supplies and strong demand.

Most-active May cotton settled up 85 points, or 1%, at 78.98 cents a pound.
For the week, the contract rose 5.43%.

Cotton charged higher amid current tight supplies as textile mills are
considered to be largely uncovered for their second-quarter cotton purchases to
meet growing retailer demand. Net weekly U.S. cotton sales decreased by 24% in
the week to Feb. 11, U.S. Department of Agriculture data showed Friday, but the
373,400-bale sales figure was still considered strong, analysts said.

Traders continued the scramble to get out of short positions, or bets the
market would move lower, by buying them back to close out their exposure. At
the same time, speculators, who have no use for the underlying commodity, ran
after the bullish long positions that are in short supply, analysts said.

Liquidity is now tight in the cotton market as commercial traders try to exit
shorts, while speculators attempt to buy long, bullish positions, said Peter
Egli, director of risk management at Plexus Cotton Ltd. in Phoenix.

May futures rose early in the session and found resistance midday at 79.27,
the contract's strongest point since Sep. 23, 2008. Traders sold at the level
and kicked the market back near unchanged.

"You've had a really strong move, so it's definitely profit taking," said
Spencer Patton, chief investment officer at Steel Vine Investments in Chicago.
The contract has risen 15.75% since Feb. 5.

But futures reclaimed gains and held stronger into the close.

"We're getting ready for a bullish delivery period--we're rationing a tight
supply," said Keith Brown, principal of Keith Brown & Co. in Moultrie, Ga.

Monday is first notice day for the March cotton contract.

Analysts had mixed takes on how the market reacted to 2010-11 supply and
demand estimates from the U.S. Department of Agriculture's outlook forum.

The USDA's projections for next year were "friendly" to futures prices, but
current fundamentals are enough to keep prices supported, said Keith Brown,
principal of Keith Brown & Co. in Moultrie, Ga.

"Right now, projections are so subjective. Thinks like that are noted with
interest, but they usually have very little market impact," said Mike Stevens,
an independent cotton analyst in Mandeville, La.

ICE daily cotton stocks increased by 5,149 500-pound bales Thursday to total
507,850 bales with 32,721 bales awaiting review, according to exchange data.

ICE cotton open interest--the number of active positions left at the end of
the session--increased by 428 positions Thursday to total 163,435, according to
the exchange.

Volume was estimated at 26,185 lots. In options, approximately 10,635 calls
and 6,814 puts traded, according to exchange data.

Close Change Range
Mar 78.79 +182 pts 76.31-79.87
May 78.98 + 85 pts 77.51-79.27
Dec 72.66 - 68 pts 72.40-73.60