NEW YORK (Dow Jones)--Cotton prices bounced higher Friday as traders got
confirmation of a the mammoth incoming U.S. crop that had been hanging over the
market for weeks.

Nearby cotton for October delivery settled 0.86 cent, or 1%, higher at 78.15
cents a pound on ICE Futures U.S. The most actively traded December contract
ended 1 cent, or 1.3%, higher at 74.99 cents a pound.

The U.S. Department of Agriculture surprised cotton traders Friday by
lifting its projection for 2010 U.S. cotton output to 18.30 million bales--up
10% from the June estimate and 50% higher than last year's production. Cotton
prices have fallen 6% since mid June. The USDA raised its estimate for planted
cotton acres higher on June 30, and traders sold in anticipation that larger
output would weigh on prices.

"The overall impact of the report continued to indicate that cotton is a
two-sided thing for now, with 75 cents being a pivot by which to trade around,"
according to a market letter from Varner Brothers, a brokerage in Memphis.

Cotton traders are now looking at demand prospects as the production front is
considered strong.

Cotton prices rallied to more than two-year highs in late April as world
cotton demand rebounded with the economy. There is currently little cotton
available for sale as traders await the fall harvest in the Northern
Hemisphere. However, continued strong demand is as uncertain as the economy.

Into the harvest season, cotton prices are likely to ease in line with the
seasonal trend, analysts said.

"[Prices] could move southward, but it's not going to fall off a cliff,"
said Gary Raines, fiber and textiles analyst for FCStone in Nashville.

ICE daily cotton stocks decreased by 69,169 500-pound bales Thursday to total
229,859 with 67,114 decertification orders, according to exchange data.

ICE cotton open interest--the number of active positions left at the end of
the session--decreased by 1,015 positions Thursday to total 158,164, according
to the exchange.

Volume was estimated 11,972 lots. In options, approximately 9,887 calls and
4,222 puts traded on the floor, according to exchange data.

Close Change Range
Oct 78.15 +0.86 77.07-78.40
Dec 74.99 +1.00 73.61-75.38
Mar 76.11 +0.94 74.81-76.41