U.S. cotton futures closed mixed Tuesday, with nearby July falling and
most-active December gaining slightly amid active spread trading and light
support from firm outside markets.

Nearby July cotton traded on ICE Futures U.S. lost 0.59 cent, or 0.71%, to
settle at 81.97 cents a pound. Most-active December added 0.15 cent, or 0.19%,
to end at 79.62 cents.

December's intraday high of 79.70 cents was the strongest price for cotton
since Sept. 29, 2008.

Cotton futures continue to make new highs amid tight supplies and stout
export demand.

Speculative fund buying provided the main support in December, said Sharon
Johnson, senior cotton analyst at First Capitol Group in Atlanta.

Most of the activity centered on speculative fund buying battling producer
selling in December cotton.

Prices fell earlier in the day when producer sales drove the December
contract into preprogrammed sell stop areas, taking December to an intraday low
of 78.82 cents, said Johnson.

December cotton later rebounded after buying support was uncovered near the
lows and spread trading helped to firm up prices. A weak U.S. dollar, a 2.4%
rally in crude oil and a strong equity market provided outside support for
cotton, encouraging speculative fund buying.

Traders are anxious to know just how much demand is currently in the market,
though certificated cotton stocks aren't dropping sharply just yet, Johnson
explained.

"This is like a high-stakes game of musical chairs. Who's going to be left
holding all of this high-priced cotton?" she said.

An expected large 2010-11 U.S. cotton crop will eventually ease tight supply
pressure, likely making the product currently in warehouses more expensive.

At the same time, an expected pickup in global economic activity will likely
fuel demand for cotton. The U.S. Agriculture Department last week raised
2009-10 cotton exports to 12.25 million bales, from 12 million projected in
May.

U.S. cotton production in 2010-11 is expected to total 16.7 million bales,
while exports were pegged at 13.5 million bales.

Certificated U.S. cotton stocks fell 11,948 500-pound bales to total 784,579
bales. The U.S. Agriculture Department said that 10,814 bales had been
decertified.

Open interest--the number of open positions in the market at the previous
day's close--rose 3,717 to total 175,936 contracts, ICE reported. Traders
rolled 4,038 positions out of July and plowed 7,027 into December ahead of
first-notice day on June 24.

Volume is pegged at 19,015 contracts traded, with 2,749 calls and 2,025 put
options traded.

ICE Close Change Range
July 81.97 -0.59c 81.69-82.84
Dec 79.62 +0.15c 78.82-79.70