* Tame U.S. retail sales limit cotton's gains
* Mills buy as prices hold towards lower half of medium-term
range
* Most rollovers out of March completed as Feb. 23 delivery
day nears

NEW YORK, Feb 14 (Reuters) - Benchmark U.S. cotton
futures closed higher on Tuesday, as mills grabbed cotton while
prices remain in the lower end of their recent trading range,
but later-dated contracts slipped as a tepid U.S. retail sales
report dampened the outlook for demand.
"I think the funds still want to own it (cotton). And,
frankly, I think you're going to find buying from here down by
the commercials," said Jobe Moss, cotton broker at MCM Inc in
Lubbock, Texas.
Benchmark March cotton on ICE Futures U.S. settled at
92.25 cents per lb, up 0.73 cent, after keeping to a modest
trading range between 91 and 92.34. The contract set an inside
day on price charts, meaning a higher low and lower high.
Volume in the March contract came to 11,053 lots shortly
after the exchange close.
While most of the larger investment banks with positions in
the cotton market have already finished rolling out of March
futures into July contracts as the Feb. 23 delivery date
approaches, some small speculators continue to cover short
positions in March futures and still others add to long
positions, giving some lift to prices.
But some brokers said some mills held off pricing their
cotton when prices rallied from 87 cents up to 98 cents during
mid-December to late January.
"I think that rally gave a wake-up call to some foreign
mills who had been sitting on their hands. As prices came back
down, you've seen some buying stop the market(from falling),"
said MCM's Moss, adding that this would only provide a
short-term boost to prices.
Without a pickup in demand, however, analysts worry that a
even near normal cotton crop in 2012 could weigh on prices.
After last year's drought-like conditions in Texas, some
observers worry that the 2012 crop could once-again suffer from
a lack of moisture.
"But, if we get adequate moisture and things start to look
okay for a cotton crop, I think it will be hard for the market
(prices) to hold," said Moss.
A weaker-than-forecast U.S. retail sales report kept a lid
on cotton prices, suggesting soft demand for the fiber.
U.S. retail sales rose less than expected in January as
consumers cut back on car purchases and did less online
shopping. The apparel component in the report has stayed flat
for the last several months.
Open interest in cotton, an indicator of investor exposure
in the market, rose by 2,489 lots to 188,727 lots as of Feb. 13
ICE Futures U.S. data showed.
On Monday, trading volume slipped to 26,766 lots from 31,064
lots traded on Friday, exchange data showed.