NEW YORK (Dow Jones)--Cotton prices sprang higher Tuesday as demand cues
surface and available supplies dwindle.

Nearby cotton for July delivery closed up 1.10 cent, or 1%, at 78.32 cents a
pound on ICE Futures U.S. The most-active December contract ended 0.90 cent, or
1%, higher at 76.41.

Cotton prices began the week on a bullish cue Monday after sliding 7.5% from
May 19 through June 4. Speculators, such as banks and hedge funds, sold cotton
as market activity indicated prices were unlikely to rise after moving sideways
for nearly three months. At the same time, fear that European sovereign debt
woes could crimp economic growth prompted an exodus from many markets. Despite
fund sales, buying from commercial traders like mills and merchants has
remained consistent as the remnants of the 2009 fall harvest are sold to
spinning mills overseas. Traders are contemplating low cotton availability that
will continue until the next harvest.

"Supplies are tight and cash inquiries [to buy] are extremely heavy," said
Ron Lawson, managing director of LOGIC Investment Services in Sonoma, Calif.

Cotton merchants are removing cotton from exchange stocks to sell on the cash
market rather than allowing it to be put up for delivery against the futures
contract, Lawson noted.

ICE daily cotton stocks decreased by 74,095 500-pound bales Monday to total
934,026 with 14,102 bales awaiting review and 74,012 decertification orders, or
requests to withdraw one bale, according to exchange data.

Traders continue to roll from the July contract into December to avoid
participating in the physical delivery process that begins July 24 for the
front month, analysts note.

December futures, which represent the fall harvest, seem to have found bottom
at 74 cents, a cotton broker and analyst said.

Traders are keeping a vigilant watch on weather conditions that could affect
the growth and development of the 2010 U.S. cotton harvest. Sixty-six percent
of the U.S. cotton crop was rated in good-to-excellent condition in the week
ended June 6, U.S. Department of Agriculture data show. The crop is 91% planted
in the same timeframe. Eight percent of the crop is squaring, or developing the
buds for flowers. Those flowers bloom before the development of the boll, which
holds the fiber.

ICE cotton open interest--the number of active positions left at the end of
the session--increased by 119 positions Monday to total 176,484, according to
the exchange.

Volume was estimated at 41,643 lots, according to exchange data. In options,
3,499 call and 1,850 puts traded on the floor.

Close Change Range

Jly 78.32 +1.10 78.45-79.68
Oct 75.81 +0.99 74.95-75.90
Dec 76.41 +0.90 75.39-76.55