KANSAS CITY (Dow Jones)--Cotton futures climbed past two-year highs Tuesday
as Tropical Storm Hermine drenched crops in southern Texas and India aimed to
limit exports.

The move by India, the world's No. 2 exporter, to levy a temporary export tax
on cotton to avoid local shortages further tightened the global market. Textile
mills are attempting to secure cotton to meet demand while crops in Pakistan
are hurt by devastating floods.

Tuesday, most active December cotton rose 1.73 cents, or 1.9%, to 91.18 cents
a pound on ICE Futures U.S. in New York. Prices ended off intraday highs as
traders booked profits on the advance. The session peak of 92.82 cents was the
strongest price since July 18, 2008.

Thinly traded October cotton raced to a 15-year high of 93.85 cents a pound
and settled up 0.37 cent, or 0.41%, to 91.32 cents.

India will allow tax-free cotton exports of up to 5.5 million bales until
Oct. 1, after which a prohibitory export duty will kick in, Commerce Secretary
Rahul Khullar said over the weekend. Indian officials will review the situation
on Nov. 15 to see if any adjustments are needed.

Many traders had expected India to ship cotton with no restrictions as the
country anticipates a record crop in 2010-11.

"The No. 2 exporter was poised to get back in [the export market] and now
she's not," said Keith Brown, cotton analyst and principal at Keith Brown & Co.
in Moultrie, Ga.

Pakistan will likely increase imports dramatically to counter a significant
production shortfall. Pakistan's cotton output has been revised down by 17% to
8.75 million 480-pound bales because of the widespread floods that inundated
1.1 million acres of cotton. The production shortfall is seen boosting imports
by about 67% to 3.5 million bales, the USDA attache in Islamabad said recently.

Cotton is a key cash crop for Pakistan and is the lifeline of the country's
textile industry. Textile shipments accounted for 51.8% of the country's total
exports in 2009.

The problems come at a time when global ending stocks are the tightest in 14
years, as cotton demand remains robust and textile mills scramble for available
supplies. Global supplies will be replenished when the U.S. and India harvest
their large crops, though strong mill consumption in China and India are
expected to keep stockpiles at relatively low levels.

Traders are also watching Tropical Storm Hermine, which brought high winds
and as much as nine inches of rain to parts of the lower Rio Grande Valley
Tuesday morning. The storm is expected to dump four to eight inches of rain as
it moves north through Texas, weakening to a tropical depression later Tuesday,
National Hurricane Center forecasters in Miami said.

Heavy rains and strong winds also lashed the Coastal Bend cotton-producing
area, bringing unwanted moisture at a time when farmers are trying to put the
crop in the bin.

"A large part of our cotton is currently being harvested...in the lower
Valley and the Coastal Bend area," said Paul Sueper, a statistician with the
National Agricultural Statistics Service in Austin, Texas.

Farmers in those areas had harvested 30.7% of the crop as of Monday, an
official with the USDA's Agricultural Marketing Service Cotton Program said
Tuesday. This leaves a significant amount of the cotton vulnerable to wind and
rain.

The lower Rio Grande Valley and Coastal Bend area are expected to produce 1.1
million 480-pound bales this year. High winds and heavy rain could blow cotton
to the ground or create quality issues as too much moisture permeates the
fiber.

The much larger West Texas cotton crop, estimated at a record high 8.8
million bales, isn't nearly as advanced as crops in the south, with most bolls
not yet open. Rains from Hermine would benefit the crop, said Brown, as plants
continue to fill bolls, which will eventually open to reveal the fluffy white
fiber.