NEW YORK, Feb 1 (Reuters) - Cotton futures ended
higher on Wednesday, reversing losses in the previous two
sessions, as the greater gains in deferred contracts indicated
demand was recovering, dealers said.

Benchmark March cotton on ICE Futures U.S. edged up
0.14 cent at 93.39 cents per lb, and ranged from 93.20 to 94.21
cents.

'Added carrying charges indicate the market demand is
returning to a more normal posture given ample supplies,' said
John Flanagan of Flanagan Trading Corp in North Carolina.

The higher prices for deferred contracts, which cover the
cost of carrying or storing cotton, suggests that cotton is in a
bull market, Flanagan said.

Cotton ended up nearly 2 percent January for its second
consecutive monthly gain as better sentiment in the commodity
complex lifted cotton after a 10 percent drop in November.

Volume was in line with recent pace but fell below its
30-day average.

The market now looks forward to next Thursday's U.S.
Department of Agriculture monthly cotton supply and demand
report. And next Friday, U.S. industry group National Cotton
Council will issue its annual survey of potential U.S. cotton
plantings in 2012.

Open interest, an indicator of market liquidity, rose to
172,686 lots as of Tuesday versus 168,169 lots on Monday, ICE
Futures U.S. data showed.

Tuesday's volume stood at 34,060 lots, above Monday's tally
of 25,075 lots, exchange data showed.