NEW YORK (Dow Jones)--Cotton prices Wednesday bounced higher from three-week
lows as commodities and equities losses eased by the end of the session after
the rallying dollar sent prices sprawling.

Nearby cotton for May delivery settled 0.79 cent, or 1%, higher at 80.38
cents a pound on ICE Futures U.S. Most-active July sugar also settled 0.79
cent, or 1%, higher at 82.08 cents a pound, off the 80.25 low.

The greenback skyrocketed for the second consecutive session on heightened
concerns about Greece's sovereign debt. The rally intensified as Moody's
Investors Service on Wednesday placed Portugal's government bond rating on
review for possible downgrade. Fund sellers sold most commodities and equities
to seek haven in the dollar, which made contracts pricier in other currencies.

The aggressive fund selling that marked most of the session, however, eased
at the end of the day as equities losses relaxed, said Peter Egli, director of
risk management at Plexus Cotton Ltd. in Chicago.

The bounce came as July cotton dropped near 80 cents, a level where textiles
mills have bought recently. Cotton futures have eased 6% from a two-year high
hit April 26. On that day, a cotton export ban from India, the world's No. 2
producer of the fiber, sent merchants and mills scrambling to secure supplies.
World cotton demand has rebounded in the last year with economic growth.
Production in the August 2009-July 2010 crop year is expected to fall 14% short
of demand, the most recent U.S. Department of Agriculture data show.

Equities losses and continued weakness in the euro zone could lead to weaker
cotton demand, he said.

"Cotton is particularly sensitive to broader economic moves," one cotton
analyst said.

Textiles such as sheets and socks are among the first items cut from
household budgets when finances are tight, but also among the first purchases
made when discretionary purchases become feasible again.

ICE daily cotton stocks increased by 5,445 500-pound bales Tuesday to total
1.026 million with 45,941 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--decreased by 3,904 positions Tuesday to total 184,165, according
to the exchange.

Volume as of 2:30 p.m. EDT (1830 GMT) was estimated at 22,912 lots. In
options, approximately 2,597 calls and 3,046 puts traded on the floor,
according to exchange data.

Close Change Range
May 80.38 +0.79c 79.48-81.05
Jly 82.08 +0.79c 80.25-82.27
Dec 77.30 +0.22c 76.15-77.42