NEW YORK, Aug 4 (Reuters) - Cotton futures ended with
moderate gains on Thursday, despite slides across the rest of
commodity spectrum, as gains in exports, U.S. chain store
sales, and a strong technical picture all added to the rise.

The supply outlook was muddied by the contrast between
crops withered by drought in Texas and other U.S. cotton
growing regions and overabundant supplies produced in other
countries in the global market.

But near-term chart signals project an upward path for U.S.
cotton futures as support levels hold. Forecasts point to a
return to $1.1350 as a next target, which represents the break
below the neckline of a head and shoulders pattern that took
four months to form, said Glen Arnold, independent broker at a
firm of his own name in Georgia.

Benchmark December cotton futures on ICE Futures
U.S. closed 0.73 percent higher, at $1.0492 per lb, up 0.76
cent. While the contract fell briefly below the 20-day moving
average to a 2-day low at $1.0251, it ended near the high at
$1.0568 per lb. Volume for the contract came to 8,070 lots.

Among other positive factors, analysts pointed to U.S.
comparable chain store sales. Store sales, excluding Walmart,
rose 4.6 percent in July from a year earlier, with apparel and
department stores together up 4.9 percent for the month, the
International Council of Shopping Centers reported.

The U.S. Department of Agriculture in its weekly report
said net export sales came in at a positive 8,800 running bales
for old crop and 3,200 bales for new crop, the first positive
reading in several months.

Ron Lawson, Managing Director of logicadvisors.com also
noted that Chinese buyers were likely in the market around
current price levels.

'We have a pretty good idea where the bottom of this thing
is. It's where China's strategic reserve will start to buy
cotton to build their reserves. They've given a price of 19,081
yuan (roughly between $1.0 to $1.10). When we hit that price in
China, they are buyers. They have posted that price as where
they will accumulate,' the analyst said.

Hot weather continues to plague the U.S. crop as drought
worsens in the U.S. Midwest and environs.

Meteorlogix, DTN's commercial weather service, said it
expects weather in the Texas cotton growing to be dry and very
hot during the next 5 days.

Longer term, the U.S. Climate Prediction Center forecast
the dreaded El Nino or La Nina weather anomalies should not
crop up through autumn 2011, and the outlook for next year was
uncertain at best.

Overall volume came in at 11,382 lots, about 23 percent
below the 30-day average for the market on Thursday, according
to preliminary ThomsonReuters data.

Wednesday's volume came to 10,144 lots, with open interest
down at 143,866 lots as of August 3, ICE exchange data showed.
Next Thursday, the USDA will release its first monthly
supply/demand report following actual field surveys during the
current crop year.