NEW YORK, Aug 1 (Reuters) - Cotton futures ended Monday
with strong gains, rallying late to a 2-1/2-week high, as a
debt deal that seemed likely to pass the U.S. Congress boosted
sentiment and led to an improved technical picture, analysts
said.

'Some of the rally is weather and a lot of it is economics.
I think the market is feeling that we will come to an agreement
regarding the debt-ceiling issue. That's more of a sentiment
issue,' said Bill Raffety, senior analyst for Penson Futures.

Overnight, traders showed little reaction to the
announcement of a likely debt deal that would avert a
potentially devastating default.

'Last night, I was watching the market when they announced
that a debt deal would pass and there was a muted reaction,
almost nothing,' said Mike Stevens, an independent cotton
analyst in Mandeville, Louisiana.

But as the U.S. congressional vote neared, traders' spirits
were lifted, sending cotton prices sharply higher.

Key December cotton futures on ICE Futures U.S.
closed 3.28 cents, or 3.22 percent, higher at $1.0481 a lb. The
range stretched from $1.0008 to $1.0532.

Since falling to a seven-month low of 93.20 cents early
last week, cotton has risen over 13 percent to Monday's peak at
$1.0532, a level last seen on July 14.

The rally pushed December futures above a 20-day moving
average for the first time since June 15. It was the contract's
first close above the moving average since May 24.

Adding to the positive technical performance, December
futures closed a gap at $1.0446 per lb, making last Tuesday's
decline a near-term bottom and opening the door for a quick run
up to $1.0885, Stevens said.

Total market volume on Monday came in at 15,645 lots by
3:10 p.m. EDT (1910 GMT), about 3 percent above the 30-day
average, according to Thomson Reuters preliminary data.

Protracted heat in Texas has scorched cotton-growing
regions there, causing some farmers to abandon half of their
crops, according to analysts.

'The Texas crop is fried. A report from one grower in Texas
said he is approaching $900 per acre on all the inputs so far.

That's a huge sum of money, and a lot of that is for
irrigation,' Raffety said.

He cited temperatures of greater than 100 degrees
Fahrenheit for 30 consecutive days in some Texas regions for
the withering crop.

After Monday's close, the U.S. Agriculture Department's
weekly crop progress report showed 70 percent of the cotton
crop was in fair to very poor condition.

Earlier, cotton prices fell in reaction to reports on
Sunday that India had approved unrestricted cotton shipments,
igniting fears that hefty supplies would be dumped on the U.S.
market.

Later, many of those sellers bought their positions back
when the Indian Supreme Court put a hold on export leniency.

Friday's volume dropped to 11,273 lots, from 14,962 lots in
the previous session, according to ICE Futures U.S. data. Open
interest in the cotton market increased to 143,649 lots as of
July 29, the exchange data showed.