NEW YORK (Dow Jones)--Spillover weakness tugged ICE Futures U.S. cotton to
three-month lows Wednesday as economic jitters pushed the dollar higher and
pressured commodities.

March cotton settled down 59 points, or 0.85%, at 69.23 cents a pound, off of
the 69.03 low.

The dollar continued the week's gains Wednesday ahead of the monthly Fed
announcement, which yielded no change in interest rates. Traders tend to sell
futures contracts when the strong greenback makes them more expensive in other
currencies. Commodities prices, including Chicago Board of Trade grains and
sugar, coffee and cocoa, tumbled as speculative funds got out of positions.
Speculators have no use for the underlying commodity, as opposed to the
commercial traders who hedge physical business via the futures market.

"Speculators are running for the exits," said Ron Lawson, managing director
at LOGIC Investment Services in Napa Valley, Calif.

Economic sentiment is shaky amid ideas demand and world economic recovery
could be stifled by China's recent moves to rein in strong economic growth
there. China is the world's top importer of cotton and leading textile
producer. Most U.S. cotton is exported to China.

Lawson said recent cotton losses have put the market into an overbought state
in technical chart measurements, which was evident as selling wore off at lows
Wednesday. March futures have support at 68-68.50, he said.

Cotton prices are backing off of a late-2009 rally on the back of tight
supplies and growing world demand. Commerzbank said Wednesday that futures
prices could rise to 75 cents by mid-2010 on bullish fundamentals.

"After that, the supply situation should improve, as cotton producers should
react to the price increase of the past months by expanding the acreage for
cotton in spring, which should lead to a rising supply," the bank said in a
research note.

Trade futures buying at recent lows has run dry as most of their positions
are in place, Lawson said. Hedging to offset physical sales is the main source
of commercial activity, he said.

Analysts expect U.S. cotton export sales, which came in last week at 333,200
running bales to come in near that level or as low as 250,000 bales.

ICE daily cotton stocks increased by 5,448 500-pound bales Tuesday to total
458,873 bales with 47,876 bales awaiting review and 616 decertification orders,
according to exchange data.

ICE cotton open interest-–the number of active positions left at the
end of the session--decreased by 832 positions Tuesday to total 171,297,
according to the exchange.

Volume was estimated 17,846 lots. In options, approximately 6,178 calls and
3,095 put options traded.

Close Change Range
Mar 69.23 -59 pts 69.03-70.28
May 70.61 -55 pts 70.38-71.60
Dec 70.99 -56 pts 70.87-72.00