KANSAS CITY (Dow Jones)--Cotton futures climbed Monday to new 26-month highs
as tight supplies and low stockpiles continue to feed the bullish momentum,
underpinned by concerns over the Chinese and Indian crops.

Cotton for December delivery rose 1.42 cents, or 1.6%, to 92.71 cents a pound
on ICE Futures U.S. in New York. The intraday peak of 93.17 cents is the
strongest price for the contract since July 16, 2008.

Thinly traded October cotton added 0.93 cent, or 1%, to settle at 91.80
cents, near its 15-year peak of 93.85 cents.

Cotton opened higher, fueled by a continued rally in Chinese cotton prices
overnight, traders said.

Fresh buying entered the market on news that India's textile industry is
calling for new curbs on cotton exports after heavy rains may have affected the
quality of the crop in the world's second-largest producer. At the very least,
the rains have delayed the harvest by 15 to 20 days in key states such as
Punjab, Haryana and Andhra Pradesh, said Shishir Jaipuria, chairman of the
Confederation of Indian Textile Industry.

India's government in August forecast a record crop of 32.5 million,
170-kilogram bales for 2010-11, but the textile industry expects production to
be lower, though it didn't give an estimate.

Traders are also concerned that China's cotton crop may have lost yield
potential after heavy rains affected growing areas. The uncertainty surrounding
the crop in the world's largest grower and importer is enough to keep prices
supported, a broker said.

Cotton stocks around the world are at their lowest in 16 years, and
strengthening demand is expected to hold stockpiles at low levels. U.S. cotton
stocks, estimated by the U.S. Agriculture Department at 2.7 million bales, are
the smallest in 15 years.

Speculative fund traders are able to lift cotton prices rather easily as
there is no aggressive selling to counter the rally.

"As long as the crop is out in the field, the sellers really have no
ammunition...so it doesn't take much buying to get this market up," said Peter
Egli, director of risk management at Plexus Cotton Ltd., based in Chicago.

Since it will be at least four weeks before U.S. cotton begins to hit the
marketplace in earnest, speculative traders may still have time to rally prices
further.

Another supportive feature is that textile mills have been buying large
amounts of cotton on an "on-call" basis, meaning the price of the fiber has yet
to be fixed, or agreed upon. Mills purchase the cotton in such a manner knowing
that supplies are tight and hoping that prices will retreat before the price is
actually fixed.

Cotton is also supported by a weak U.S. dollar, which encouraged speculative
fund buying in commodities. The weak dollar makes the fiber cheaper in other
currencies.

Higher Chicago Board of Trade grain futures also boosted the market as cotton
competes with grains and soybeans for planted acres, said Sterling Smith,
analyst at Country Hedging in St. Paul, Minn.

Cotton is finding favor on increased speculation that corn futures could
breach $6 a bushel this year, as traders scale back the grain's yield
potential. "If cotton's going to compete with $6 corn, then it's going to have
a big fight for acres," said Smith.

Cotton traders are also watching Hurricane Igor and Tropical Storm Julia in
the Atlantic in case one would take a path toward crops in the Carolinas or
Virginia. Current forecast maps, however, show the storms turning north and
east, away from the U.S. coastline.

The possibility that crops could be damaged by current or future tropical
systems is enough to keep weather premium in the market, said Smith.