ICE cotton futures edged up for the third straight session on Tuesday as investors covered short positions amid dry weather concerns in major producers like the United States and China. The December cotton contract on ICE Futures settled up 0.46 cent, or 0.68 percent, at 68.22 cents per lb. It traded within a range of 66.78 and 68.42 cents a lb.

Monday's "conditions data suggests the 2017 crop is starting to falter," said Keith Brown, principal at cotton broker Keith Brown and Co in Moultrie, Georgia. "Besides the backwardation of the physical crop, the triggered bullish divergence is encouraging shorts to cover and specs to take a small stab at the long side." Federal data on Monday rated 60 percent of the US cotton crop in good to excellent condition, down 1 percentage point from a week earlier. Texas crop stood at 49 percent good to excellent condition compared with last week's 51 percent. Hot and dry conditions have returned across West Texas, with little mention of rain in near-to-medium term forecasts, Louis Rose, co-founder and director of research and analytics at Rose Commodity Group wrote in a note.

Similarly, heat waves might have adverse effects on China's main producing areas for cotton in Xinjiang over the next week, analysts said. A weaker dollar also supported the prices of the natural fibre. The dollar index was down 0.52 percent. The Thomson Reuters CoreCommodity CRB Index, which tracks 19 commodities, was up 0.57 percent. Total futures market volume rose by 3,974 to 20,046 lots. Data showed total open interest fell 168 to 216,138 contracts in the previous session.