NEW DELHI (Dow Jones)--Cotton prices hit fresh 15-year highs on Tuesday even
after India signaled that it would allow exports, further underscoring the
frenzy for the fiber.

Cotton for December delivery, the most actively traded contract on ICE,
settled 1.26 cents, or 1.2%, higher at $1.0519 a pound. Nearby but thinly
traded October cotton settled 2.1% higher at $1.0814 a pound.

After putting cotton traders on edge by delaying its decision by one day, an
Indian ministerial panel moved to allow cotton shipments overseas starting Nov.
1, said Textiles Secretary Rita Menon. India is the world's second-largest
exporter after the U.S.

The bureaucratic step of registering exports will start from the new
marketing year, which begins Oct. 1.

The decision did succeed in cooling prices somewhat--cotton futures
subsequently backed off from their intraday highs--but it does little to
alleviate broader concerns about shortages amid robust demand for textiles.

"It is still a super bull market," said Keith Brown of Moultrie, Ga.-based
Keith Brown & Co., a commodity advisory firm.

Global stockpiles of cotton are at multi-year lows, and flooding in both
Pakistan and China have wiped out crops in those countries, which now will turn
increasingly to global markets to supply their domestic light industries.

Gary Raines, of brokers FCStone Fibres & Textiles, added that the market
remains wary of a meeting the panel scheduled for Oct. 15 that will review
Tuesday's decisions.

Futures surged last week after India's textile industry said it wanted to ban
exports until January to ensure local mills have time to replenish their
stocks. With supplies depleted in China and Pakistan, the prospect of India
holding back its harvest stoked fears of a severe worldwide shortage.

Following complaints by India's mills, the country's textile ministry has
been pressing for delaying exports of the fiber until January to make sure
there was no local shortage.

Harvesting of India's new cotton crop started earlier this month and the
procurement of fine cotton grades that textile mills require is mostly complete
by January.

Earlier this month, India allowed tax-free exports of up to 5.5 million
bales--each weighing 170 kilograms--and said shipments beyond that would
attract a tax.

Farm Minister Sharad Pawar told reporters that a bumper crop will enable the
country to comfortably export between 7.5 million bales and 8 million bales in
2010-11.

The Oct. 15 ministerial panel will review whether there is a need to tax
cotton exports beyond 5.5 million bales, Textiles Secretary Menon said. The
government is yet to announce the magnitude of the tax to be levied on exports
beyond the limit.

If the process of registration had been delayed beyond the scheduled date of
Oct. 1, it would have disrupted delivery schedules of local cotton exporters,
who had contracted exports of around 1.4 million bales in advance of the new
crop.

The USDA predicts worldwide cotton use will outpace production this year, and
mills have scrambled for months to buy the natural fiber while it is still
readily available, driving prices up steadily since July.

With the rest of the world desperate for its supply, India's cotton producers
could make more money selling to other countries rather than local mills.

India expects to produce 32.5 million bales of 170 kilograms each in 2010-11,
up 10% from 29.5 million bales in 2009-10 because of higher plantings. It
exported around 8.3 million bales in 2009-10.