NEW YORK, Nov 24 (Reuters) - U.S. cotton futures bounced to
a firmer finish on Wednesday, as technically oversold
conditions and prospects of greater Asian demand growth helped
prices snap a two-week losing streak that shaved more than 26
percent from the market.

'I think it was just oversold as much as anything else,'
Jobe Moss, an analyst for brokers and merchants MCM Inc in
Lubbock, Texas, said of the market rebound.

The benchmark March cotton contract on ICE Futures
U.S. climbed 4.80 cents, or 4.3 percent, to settle at $1.1659
per lb, near the upper end of its $1.1113 to $1.1771 session
range.

The bounce made cotton the biggest gainer in the CRB Index on Wednesday.

(Graphic: http://link.reuters.com/syc86q )

Volumes were relatively firm ahead of the U.S. Thanksgiving
Day holiday on Thursday. The total stood at 27,038 lots by 3:28
p.m. EST (2028 GMT), up more than 50 percent from year-ago
levels, Thomson Reuters preliminary data showed.

'There have been people waiting on the sidelines to buy
futures and we had some short-covering. Once we started up,
people just cashed in,' MCM's Moss said.

Momentum began to build in the overnight session in China
after the country's Banking Regulatory Commission (CBRC) urged
easier bank practices for the agriculture sector due to a
severe shortage of cotton, among other crops.

'This is the first official admission from a Chinese
authority that they are indeed facing shortages,' said Sterling
Smith, an analyst for Country Hedging Inc. in St. Paul,
Minnesota.

'I think it's going to give cotton a good bullish
underpinning.'

The Zhengzhou Commodity Exchange's May cotton contract was last
traded Wednesday at 25,755 yuan per tonne, up
190 yuan on the day.

Cotton has been hit hard in recent weeks by mounting fears
that China may take aggressive action to curb inflation running
at a 25-month high, raising interest rates or capping domestic
prices with measures that could crimp commodity demand or drain
liquidity from bubbling domestic markets.

Since topping out above the $1.50 per lb level earlier this
month, the March contract has lost more than 26 percent of its
value.

But signs began to emerge lately, signaling the two-week
rout could be running out of steam.
One trader cited the steady decline in volumes as one
sign.

(Graphic: http://link.reuters.com/jem96q )

'I think we have hit the bottom for a while,' Moss said.
'I think we are going to have rally back ... maybe up to
$1.25 to $1.30, but we're not going to get anywhere near those
fantasy highs two weeks ago.'

U.S. Census Bureau data showed cotton mill consumption fell
to 302,582 bales in October from a revised 350,985 bales a
month earlier.

Year-over-year in October, mill consumption increased by 16
percent.