NEW YORK (Dow Jones)--Cotton prices inched higher Tuesday, supported by
strong demand for waning supplies of available fiber.

Nearby cotton for July delivery settled up 0.31 cent, or 0.4%, at 82.46 cents
a pound on ICE Futures U.S. Most-active December cotton settled 0.04 cent, or
0.05%, higher at 79.21 cents a pound.

Improving world economic conditions have triggered a recovery in demand for
cotton. World production is likely to fall 14.5% short of consumption in the
current season, which ends July 31, according to U.S. Department of Agriculture
estimates. Global cotton stocks are tightening ahead of the fall harvest in the
Northern Hemisphere. Despite expectations for a bumper crop, output is still
estimated to come in 4.5% short of use in the next season, the USDA says.

The futures market is trading in a somewhat quiet period at the moment.
Though first notice for physical delivery of July futures is expected to go off
without a hitch Thursday, traders are looking ahead to the June 30 USDA planted
acreage estimate.

Weekly U.S. cotton sales and exports remain strong, which keeps bullish
traders interested in the market.

"It's the quintessential fairly priced commodity right now," said Spencer
Patton, chief investment officer at Steel Vine Investments. December futures
have firm support at 78 cents, and could rise to 87 cents by the end of July,
Patton said.

Speculators reduced bearish short positions in cotton in the week to June 18,
which left those traders holding a 10.3% net long bullish stake in cotton, ICE
data show.

However, as the harvest approaches, supply pressure from the incoming crop
could drag futures prices lower, said Sharon Johnson, senior cotton analyst at
First Capitol Group in Atlanta.

The condition of the U.S. cotton crop was rated 62% good-to-excellent in the
week ended June 20, USDA data show.

Analysts hold mixed opinions about the possible effects on the cotton market
of China's weekend move to loosen the yuan's peg to the dollar. China is the
world's top producer and importer of cotton, as well as the leading textile
manufacturer. The U.S. is the No. 1 cotton exporter and No. 3 producer behind
India.

Patton said a stronger yuan would make U.S. cotton less expensive for Chinese
importers.

Johnson said China faces increasing raw fiber prices, rising labor costs and
a stronger currency that should make their exports more expensive to other
countries.

"Thus far, yarn prices and demand for product have held up, but Chinese mills
will find profitability more elusive and is likely to work against the raw
cotton consumption increase projected by the [the USDA]," Johnson said.

Patton said China's domestic cotton consumption is strong enough to absorb a
sizeable amount of the textiles produced there.

ICE daily cotton stocks decreased by 39,440 500-pound bales Monday to total
529,352, with 41,755 decertification orders, according to exchange data.

ICE cotton open interest--the number of active positions left at the end of
the session--decreased by 248 positions Monday to total 166,376, according to
the exchange.

Volume was estimated 12,812 lots. In options, approximately 749 calls and
1,402 puts traded, according to exchange data.

Close Change Range
Jly 82.46 +0.31 81.55-82.55
Oct 79.39 +0.48 78.40-79.52
Dec 79.21 +0.04 78.54-79.43