NEW YORK (Dow Jones)--A firm dollar and losses in Chicago Board of Trade
grains pulled ICE Futures U.S. cotton to two-month lows Tuesday.

March cotton settled down 0.6%, or 44 points, at 71.64 cents a pound, off the
71.53 low. The May contract also settled 44 points lower at 72.75.

Traders sold commodities, including cotton, as firmness in the dollar made
them more costly. The dollar rose amid jitters attributed to euro-zone woes
including weaker-than-expected German economic data and concern over Greece's
sovereign credit. Spillover weakness from CBOT grains comes ahead of 2010
spring plantings, when producers look at futures prices to gauge profits from
planting crops such as soy, corn or cotton.

"Short term, the [cotton] price action looks to be starting to make a move
lower," said Spencer Patton, chief investment officer at Steel Vine Investments
in Chicago.

March futures could slip to the 69-cent level without fresh fundamental news
to support the market, Patton said.

Futures are underpinned by tight physical supplies as world consumption
grows, said Ron Lawson, managing director at Logic Investment Services in Napa
Valley, Calif. He noted buying from China over the weekend.

The U.S. Department of Agriculture estimates world cotton production will
come in 10% short of consumption in the ongoing 2009-10 crop year.

March futures are unlikely to move below 70.30 cents, the point where
December 2009 futures traded before going off the board, Lawson said.

Cotton futures hit 16-month highs on Jan. 4, the top of a rally built on firm
demand amid tightening world supplies, analysts said. Speculative traders have
since sold bullish positions.

ICE daily cotton stocks increased by 5,714 500-pound bales Friday to total
427,925 bales with 30,642 bales awaiting review--on par with weekly stocks
data, according to exchange data.

ICE cotton open interest--the number of active positions left at the end of
the session--decreased by 2,991 positions Friday to total 178,163, according to
the exchange.

Volume was estimated 13,372 lots. In options, approximately 5,728 calls and
2,972 puts traded, according to exchange data.

Close Change Range
Mar 71.64 -44 pts 71.53-72.64
May 72.75 -44 pts 72.68-73.75
Dec 73.32 -41 pts 73.22-74.00