* Room for better data on world cotton stocks, use -ICAC

 * Speculators not to blame for volatile cotton ride

 * US mills point finger at India export caps

 By Roberta Rampton

 WASHINGTON, Feb 8 (Reuters) - Governments should provide
more reliable data on world cotton stocks and use, market
participants said at a panel discussion on Tuesday, eschewing
suggestions of interventions to help ease the pain of soaring
prices.

 Cotton prices surged to record levels last week, prompting
calls for limits on speculators or new types of government
fixes. But most traders and government representatives at a
seminar convened by an international advisory group urged a
moderate approach.

 World cotton prices have risen 134 percent since the start
of the season, the International Cotton Advisory Committee
said, noting increased buying by speculative funds was not to
blame for the climb. [ID:nN04256407]

 "There is strong demand and shortage of cotton that caused
prices to go higher," said Andrei Guichounts, an economist with
the ICAC, an association of governments from major cotton
producing and consuming countries, which will hold a seminar in
China in June on market data.

 WHY SO VOLATILE?
 Of 53 commodities spanning energy, metals and agriculture,
cotton was been the most volatile in 2010, said Alejandro
Plastina, an analyst with ICAC.

 Speculation by funds overwhelmed the cotton market in 2008,
but the situation this year is different, said ICAC and others
at the event, which comes as world regulators are seeking ways
to rein in speculators in soaring commodity markets.

 "What's happening right now can't really be attributed to
speculators or index funds or hedge funds," said Joe O'Neill,
an independent trader who is chairman of
IntercontinentalExchange Inc's (ICE.N) cotton committee.

 The economic crisis has slashed demand -- and then
plantings -- of cotton, but demand from China remained
surprisingly strong.

 "I think we all assumed that when we were in the recession,
that mill use would decline worldwide. Nobody expected Chinese
mill use to increase," O'Neill said.

 In 2007, the United States had six months worth of supplies
stockpiled. But by 2010, there was a mere six weeks worth of
stocks, said Jordan Lea, a cotton merchant with Eastern Trading
Co. Inc. of Greenville, South Carolina
 "This is a classic bull market we're in where demand is
driving prices higher," Lea said.

 Cotton mills in the United States have been pinched by high
prices, and many may shut down this year because of a lack of
cotton due to strong exports, said Cass Johnson, president of
the National Council of Textile Organizations.

 "It would be hard for me to put into words the tension and
the anxiety it has caused," Johnson said.

 A decision by India to limit exports has added to the
volatility, Johnson said.

 But that assertion was rejected by Vinay Kwatra, a diplomat
from the Indian Embassy in Washington, who explained his
government sought to balance the interests of its producers
with its textile industry amid the soaring world prices.

 FINANCIALIZATION OF COMMODITIES

 While many economists point to the correlation between
commodity prices and movements in the U.S. dollar as evidence
of the "financialization" of commodities, there is no
conclusive evidence that investment by funds has played more
than a short-term role in markets driven by supply and demand,
a World Bank economist said.

 "This sort of 'new money' is unlikely to alter long-term
trends," said John Baffes.

 But volatility and strong returns in cotton have prompted
flashy headlines, which could draw "undue attention" from
investors, said Lea.

 Lea said he supports the direction taken by the Commodity
Futures Trading Commission to limit the largest of the large
speculative positions because he worries an influx of
investment could again overwhelm the relatively small cotton
market. But he said he hopes limits don't drive investors out
of the market completely.

 "We need the liquidity these guys offer, but within
reason," said Lea.