NEW YORK, Nov 14 (Reuters) - Cotton futures settled higher
Monday on investors and option-related buying as talk
circulated in the market that a top merchant is poised to take
delivery of the spot contract when it goes into first notice
next week, analysts said.

The spot December cotton contract on ICE Futures
U.S. increased 1.55 cents or by 1.5 percent to finish at
$1.0079 per lb, moving from 97.79 to $1.009.

The now-active March cotton futures fell 1.42 cents
to settle at 96.62 cents a lb.

Total volume traded Monday hit around 31,000 lots, more
than two thirds above the 30-day norm, preliminary Thomson
Reuters data showed.

Mills who need to cover positions are forced to scramble to
do so as the delivery period starts next week, dealers said.

Analysts said the large premium enjoyed by the December
contract over March raises the prospect of a squeeze similar to
the one seen in the market when the May and July 2011 cotton
contracts went into delivery.

'The general feeling is somebody's going to squeeze
Dec(ember),' said a dealer in Texas, the top cotton growing
state in the United States.

On a technical level, dealers said the upside target would
be $1.04 and the downside target is at 95.78 cents, basis
December.

Open interest in cotton, usually taken as an indicator of
investor exposure in cotton, stood at 145,304 lots as of Nov
11, exchange data showed.

Total volume traded Friday in the cotton market reached
38,056 lots, the highest since June 10, ICE futures U.S. data
said.