NEW YORK (Dow Jones)--A bullish government crop report kicked up ICE Futures
U.S. cotton to the three-cent trading limit Tuesday as the weaker dollar
boosted most commodities prices.

March cotton settled up 300 points, or 4.15%, at 72.16 cents a pound.

In an early morning report, U.S. Department of Agriculture raised its outlook
for 2009-10 U.S. cotton exports to 12 million bales from 11 million bales last
month.

The export adjustment was regarded as very bullish to the market, analysts
said. Most-active March cotton had been higher prior to the government report
due to the weaker U.S. dollar, which makes commodities like cotton more
attractively priced for foreign buyers. Once the data were released, March
cotton briefly rose 3 cents, which is the exchange-imposed daily trading limit.
Futures backed off of that high but retested that level and stuck there through
the end of the session.

"All of the sudden some speculators who jumped out are coming back into the
market--the fact that the dollar's lower helps," said Andy Ryan, risk
management consultant at FCStone in Nashville.

The USDA also raised its outlook for 2009-10 cotton consumption in China and
India in the same report. Analysts say the bullish adjustment to U.S. export
data was unprecedented at this point in the year.

Cotton futures have been in a downward spiral for the past five weeks. March
futures hit at 66.55 low Friday, its lowest point in 16 weeks as speculators
got out of the market following a late 2009 rally. The contract slid back from
a 16-month high Jan. 4 at 76.77 after a late 2009 rally sparked by rising
demand and tight supplies.

Traders are rolling out of the March contract and into May, analysts noted.

Analysts said the bullish supply and demand situation will boost prices in
the near term.

March futures have overhead resistance at 72.50 cents a pound, said Sharon
Johnson, senior cotton analyst at First Capitol Group in Atlanta.

May cotton futures could rise to the 74-75 cent area, Ryan said.

ICE daily cotton stocks increased by 1,897 500-pound bales Monday to total
527,378 bales with 31,948 bales awaiting review, according to exchange data.

ICE cotton open interest – the number of active positions left at the
end of the session - decreased by 2,033 positions Monday to total 162,140 lots,
according to the exchange. Traders exited the March contract, but bought
deferred months.

Close Change Range
Mar 72.16 +300 pts 69.00-72.16
May 72.98 +222 pts 70.68-73.39
Dec 72.26 +107 pts 71.00-72.93