NEW YORK (Dow Jones)--Cotton prices rose Thursday as export sales data
indicated continued strong demand for the developing U.S. cotton crop is taking
the earliest available supplies off of the market.

Nearby cotton for October delivery settled 0.11 cent, or 0.4%, higher at
80.68 cents a pound on ICE Futures U.S. The most actively traded December
contract ended 0.60 cent, or 0.8%, higher at 76.91.

Cotton futures are 40% higher than the same time last year as world textile
demand has rebounded with the economy. Consumers put off buying socks and
sheets when budgets are tight. But a resurgence in demand has drawn down
available stocks. Merchants have sold a good portion of the earliest-harvested
cotton, leaving a lag in availability through the rest of the year, analysts
said. At this point, merchants could usually rely on certified exchange stocks
for a backup, but those bales are being quickly drawn down.

"There's been so much cotton sold to be delivered between now and the end of
the year that when we look at the snapshot today, it's difficult to see
cert[ified] stock building," said Ron Lawson, managing director at LOGIC
Investment Services in Sonoma, Calif.

The U.S. is expected to produce 50% more cotton, or 18.3 million 480-pound
bales, in the approaching 2010-11 season that begins Aug. 1, USDA data show.
Rebounding demand pushed prices higher in comparison to alternatives crops and
encouraged farmers to plant more cotton. Ideal weather has fostered crop growth
throughout the season.

Though USDA data released Thursday show both cotton exports and sales
decreased from the week before, the volumes are still considered strong for
this point in the season, analysts said. Net U.S. cotton sales for the 2010-11
marketing year decreased to 236,800 running bales in the week ended July 22
from 289,300 running bales the week before. Weekly cotton exports also
decreased to 304,200 bales from 334,100 bales last week.

At this point, commercial traders are hedging in the March contract, while
speculators, like banks and hedge funds, are driving price direction in the
December contract, Lawson said.

More support for cotton came as speculative buying lifted most commodities
prices Thursday, including Chicago Board of Trade grains, as well as metals and
energies. The dollar dropped as jobless data for the previous reporting period
was revised higher, indicating the U.S. economic recovery me be slowing. The
skidding greenback made futures contracts less expensive in other currencies.

Volume was estimated 11,700 lots. In options, approximately 6,739 calls and
2,165 puts traded, according to exchange data.

ICE daily cotton stocks decreased by 3,032 500-pound bales Wednesday to total
47,793 bales with 2,771 decertification orders, according to exchange data.

ICE cotton open interest--the number of active positions left at the end of
the session--increased by 328 positions Wednesday to total 164,826, according
to the exchange.

Close Change Range
Oct 80.68 +0.11 80.60-81.11
Dec 76.91 +0.60 76.25-77.44
Mar 75.21 +0.59 74.60-75.80