* Spot prices rally as much as 1.9 percent

* Volume heavy in spread-related trade

* Most-active March contract near 10-month lows

NEW YORK, Nov 12 (Reuters) - Spot cotton futures on ICE jumped on Tuesday on short-covering and heavy spread-related dealings as traders raced to exit positions ahead of the December contract's delivery period.

The ICE December contract, which expires on Dec. 6, rose 0.91 cents, or 1.2 percent, to 77.88 cents a lb.

The most-active March cotton contract on ICE Futures U.S. finished little changed, up 0.02 cent, or 0.03 percent, at 78.22 cents a lb and not far from last week's near 10-month low of 77.64 cents.

December cotton prices rallied nearly 2 percent on short-covering ahead of Nov. 22, the first notice day for delivery against the contract.

Grains markets including soybeans and wheat also advanced, outpacing the broader commodities sector.

The Thomson Reuters/Core Commodity CRB index fell. The U.S. dollar index advanced, weighing on dollar-traded commodities as it makes them more expensive to holders of other currencies.

Trading volumes were heavy with the fund roll under way and nearing its end.

The expiration of December contract options on Friday left a wave of new short positions in the spot contract to be covered or rolled forward unless traders want to take delivery.

"People held onto their shorts yesterday, but all of a sudden, after we didn't have any follow through on the downside, they started to cover," said Jobe Moss, a broker with MCM Inc in Lubbock, Texas.

March's premium above spot December eroded to 0.34 cent a lb, down from 1.23 cents a lb previously and a peak of 2.28 cents earlier this month.

Prices have fallen steeply from August highs near 94 cents as harvest pressure increased, concerns mounted that high prices would continue to crimp demand, and speculators liquidated out of bullish positions.

Weekly U.S. government data showed noncommercial dealers have reduced their bullish bets to a year-to-date low long position.

Exchange stocks climbed 181,132 bales on Monday, up from 176,535 previously, the most recent ICE data showed. That was the highest level since July.

A U.S. government crop progress report released after Monday's close showed little change to the crop in the world's top exporter.

Last week, the U.S. Agriculture Department raised its outlook for U.S. production as it boosted its forecast for record global inventories by the end of the 2013/14 crop year end-July.

(Reporting by Chris Prentice; editing by Jim Marshall)