NEW YORK (Dow Jones)--Cotton prices backed off Thursday as technical chart
trend indicators prompted traders to sell after a 5% rally in less than two
weeks.

Nearby cotton for July delivery settled 0.97 cent, or 1%, lower at 80.80
cents a pound on ICE Futures U.S. Most actively traded December cotton settled
0.28 cent, or 0.4%, lower at 79.42 cents a pound.

December cotton prices have jumped in recent weeks as bullish supply and
demand cues make the contract attractive. World cotton demand is expected to
outstrip supply by 13% in the current marketing year that ends July 31,
according to the U.S. Department of Agriculture. Production is still about 5%
short of demand in the following season, despite projections for larger
production. The rebounding world economy has sparked a resurgence in world
textile demand. Consumers with more expendable income buy more textiles.

But that bullish setup took a back seat to trend cues Thursday.

"Even though the fundamentals are getting more bullish, the market seems to
be overbought," said Ron Lawson, managing director at LOGIC Investment Services
in Sonoma, Calif.

Weekly U.S. cotton sales and shipments data reported Thursday by the USDA
were strong, Lawson noted. The U.S. is the top exporter of cotton and the No. 3
producer.

Traders continued to sell July in favor of December to avoid the
responsibility of supplying or receiving the underlying commodity. First notice
day to do so for the July contract is June 24.

The owners of exchange stocks continue to withdraw them, presumably for sale
overseas.

ICE daily cotton stocks decreased by 5,368 500-pound bales Thursday to total
766,728 with 3,310 decertification, or withdrawal, orders, according to
exchange data.

December futures are likely to trend within a range of 76-85 cents, Lawson
said.

Traders are looking ahead to the June 30 USDA planted cotton acreage report,
an update of March data that will provide projections for the U.S. crop to be
harvested in the fall.

ICE cotton open interest--the number of active positions left at the end of
the session--increased by 719 positions Wednesday to total 172,847, according
to the exchange.

Volume was estimated 23,092 lots. In options, approximately 2,105 calls and
2,693 puts traded, according to exchange data.

Close Change Range
Jly 80.80 -0.97 80.46-81.95
Oct 79.16 -0.12 78.35-79.60
Dec 79.42 -0.28 78.69-79.48