NEW YORK (Dow Jones)--Weekend rains in Texas boosted prospects for the 2010
U.S. cotton crop, but drove prices to four-month lows Tuesday as demand
outlooks weakened in tune with bearish economic cues.

The most actively traded December cotton contract ended 1.21 cents, or 1.3%,
lower at 74.32 cents a pound on ICE Futures U.S. It is the contract's weakest
settlement since March 2. Nearby July cotton settled 0.04 cent, or 0.5%, lower
at 81.60 cents a pound.

Cotton prices dropped Tuesday, but are still up 46% from this point in 2009.
The rebounding world economy sparked demand as consumers purchase more textiles
when household budgets allow. Physical cotton is nearly impossible to buy at
the moment, though outlooks for a large Northern Hemisphere crop in the fall
are pushing down prices.

Analysts said weekend rains in Texas triggered cotton futures sales from
speculative funds, like banks and hedge funds. More rain in the key
cotton-growing region of West Texas put a bearish spin on prices.

"The big story is the beneficial rains they had in the West Texas area," said
Andy Ryan, risk managment consultant at FCStone in Nashville. "They were
needing a little bit of rain and they got a lot of rain."

Conditions are favorable for the crop developing in West Texas, according to
Meteorlogix, a a private forecaster. West Texas is the top production region in
the No. 1 state for U.S. output of the raw fiber. Rainfall will maintain
favorable soil moisture and irrigation for this part of the crop, Meteorlogix
said.

The most recent estimate from the U.S. Department of Agriculture pegged the
upcoming U.S. cotton crop at 37% higher than the previous year at 16.7 million
480-pound bales. Strong demand sparked higher cotton prices and encouraged more
plantings. The USDA is scheduled to release a fresh estimate on Friday.

Slower than expected service-sector growth in June, as rated by the Institute
for Supply Management, damped U.S. economic recovery outlooks. Money managers
sold bullish bets in many markets in an attempt to take profits and cut losses,
analysts said. Equities and many commodities took losses late in cotton's
session.

The bearish economic news translated to outlooks for weaker cotton demand.

"People are going to use their money to buy essentials and that's not
necessarily towels and T-shirts," said Keith Brown, principal of Keith Brown &
Co. in Moultrie, Ga.

September cotton broke a long-term support level on technical charts at 75
cents Tuesday.

Next support for the contract is at 74.09, Ryan said. Significant support is
absent until prices fall below 70 cents, he said.

ICE daily cotton stocks decreased by 4,998 500-pound bales Friday to total
344,803 with 5,134 decertification orders, according to exchange data.

ICE cotton open interest--the number of active positions left at the end of
the session--decreased by 1,116 positions Friday to total 161,552, according to
the exchange.

Volume was estimated 16,259 lots. In options, approximately 5,136 calls and
1,817 puts traded, according to exchange data.

Close Change Range
Jly 81.60 -0.04 81.40-82.46
Sep 77.12 -0.71 77.00-78.67
Dec 74.32 -1.21 74.16-76.09