NEW YORK (Dow Jones)--Speculative funds sold ICE Futures U.S. cotton Thursday
to push the market to three-month lows despite indications of strong demand for
the physical commodity.

March cotton settled down 9 points, or 0.13%, at 69.14 cents a pound, off the
68.83 low for the day, and the lowest since it hit 68.80 cents on Oct. 27.

Speculative fund traders, who have no use for the underlying commodity, sold
cotton futures as well as coffee and cocoa. The strong dollar prompted some
sales as traders sought a safer investment amid economic uncertainty in the
euro-zone. Traders tend to sell contracts when the firm greenback makes futures
more costly in other currencies.

"Funds are getting out of commodities and cotton is one of them," said Peter
Egli, director of risk management at Plexus Cotton Ltd. in Phoenix.

Buying from commercial traders, who hedge physical business in the futures
market, helped futures trim losses from the lows, said Andy Ryan, risk
management consultant at FCStone in Nashville. Chicago Board of Trade grains
bounced late in the session, which may have given cotton a boost off of lows,
Ryan said. These commodities often trade in tandem ahead of spring planting
season as farmers gauge possible returns on the crops with futures prices.

Analysts said March cotton has support at the 68-69 cent level in the near
term.

Cotton prices are falling back from an extended rally in 2009 as
lower-than-expected supplies met strong demand amid expectations for an
economic recovery. However, analysts said speculators are now keying in on
technical chart cues and overall economic sentiment rather than cotton's
specific fundamentals.

Cotton fell despite a typically bullish fundamental news as U.S. cotton
export sales reached a marketing year high in the week to Jan. 21. The U.S. is
the world's top cotton exporter.

ICE daily cotton stocks increased by 9,225 500-pound bales Wednesday to total
169,924 bales with 43,369 bales awaiting review, according to exchange data.

ICE cotton open interest--the number of active positions left at the end of
the session--decreased by 1,373 positions Wednesday to total 169,924, according
to the exchange.

Volume was estimated 21,478 lots. In options, approximately 4,631 calls and
3,100 puts traded, according to exchange data.

Close Change Range
Mar 69.14 - 9 pts 68.83-69.83
May 70.71 +10 pts 70.40-71.25
Dec 70.75 -24 pts 70.62-71.20