NEW YORK (Dow Jones)--Cotton ended trading Friday at its highest levels in
two years as traders speculate over demand in a tightening supply situation.

Nearby May cotton on ICE Futures U.S. settled 1.84 cents, or 2%, higher at
84.26 cents a pound--the highest settlement price for a front-month contract
since March 6, 2008. The most-active July contract settled 1.38 cents, or 1.6%,
higher at 86.20 cents a pound.

A trade ban shook the market this week as India, the world's second-leading
cotton producer and exporter, cut off shipments in an effort to alleviate high
domestic prices. Though the India said it would recertify export registrations
for sold, unshipped cotton, the delay and uncertainty sent merchants and
commercial traders looking for new sources of cotton--particularly in ICE
certified stocks, deliverable against the futures contract.

World cotton consumption is expected to outpace demand by 14% in the year
ending July 31, U.S. Department of Agriculture data show. World fiber demand
has rebounded from a dropoff sparked by the credit crisis. Now textile demand
is returning as household budgets ease, and retailers are looking to restock
shelves. But textile manufacturers, most of which are based in Asia, are having
difficulty securing raw supplies following a lower-than-expected output and
ongoing tight credit.

Speculative traders are buying on bullish market outlooks and merchants and
textile mills are buying as the May and July contracts roughly represent what
is left of ICE cotton stocks until December. Supplementary supplies will be
available from harvests in Brazil and Australia in the meantime.

Traders are looking at how major cotton merchants act in Friday evening's ICE
delivery data for cues on demand. Carrying charges--the fees for keeping the
cotton in storage--exist between the May and July contracts, so merchants could
easily hold on to it until the next delivery period, analysts said. However,
delivery at this point would indicate demand is weak on the world market and
the exchange is the most profitable choice.

"In March, Cargill took delivery of cotton when there were no carrying
charges in the market while Allenberg delivered--if Cargill chooses to deliver
this month, the market is likely to set back," said John Flanagan, president of
Flanagan Trading Corp. in Fuquay-Varina, N.C., said in a market letter.

ICE daily cotton stocks increased by 19,141 500-pound bales Friday to total
976,580 with 39,698 bales awaiting review and 34 decertification orders,
according to exchange data.

ICE cotton open interest–-the number of active positions left at the
end of the session--increased by 2,202 positions Thursday to total 186,772,
according to the exchange.

Volume was estimated 21,505 lots. In options, approximately 4,219 calls and
7,798 puts traded, according to exchange data.

Close Change Range
May 84.26 +184 pts 82.61-84.32
Jly 86.20 +138 pts 84.90-86.38
Dec 77.39 + 20 pts 77.00-77.47