NEW YORK, Sept 14 (Reuters) - Cotton futures ended up for a
third straight day on Wednesday, as short covering and merchant
buying helped boost values closer to a critical line of
technical resistance.

With a lack of confidence surrounding macroeconomic
prospects, cotton futures have held in a narrow band in recent
weeks, unable to garner momentum through either side of a $1.09
to $1.15 range.

'I do think we are seeing a little better demand creeping
into the equation ... the mills are a little more inclined to
do some buying,' said Sharon Johnson, senior cotton analyst at
commodities brokerage Penson Futures in Atlanta, Georgia.

'We are kind of building a base where we are working higher
to bring forward some upward momentum from this sideways
trend.'

The key December cotton contract on ICE Futures U.S.
rose 0.66 cent to end at $1.1367 per lb, after moving from
$1.1159 to $1.1418.

Cotton futures are up more than 7 percent this month. Stiff
overhead technical resistance will either pour some cold water
on the rally or trigger further strength, analysts said.

'Last week, we tested the 200-day moving average and could
not do anything with it,' Penson's Johnson said. 'If we
overcome that, $1.20 here we come without any trouble. That's
going to give a lot of specs on the sidelines who were not very
long or are long and short the green light.'

(Graphic: http://link.reuters.com/xen73s )

Looking ahead, the market will await the U.S. Agriculture
Department's weekly export sales report on Thursday to possibly
provide some further inspiration for fiber contracts.

On Monday, the USDA's crop progress data showed 44 percent
of the cotton crop in poor to very poor shape, against 12
percent a year ago.

Cotton market volume on Tuesday was 11,975 lots, up more
than 3,000 from the prior session, ICE Futures U.S. data
showed.