* Market up 1.4 pct on uncertainty over storm damage
* Little impact seen on crop if rains let up in 2 days

NEW YORK, Aug 29 (Reuters) - U.S. cotton prices surged on
Wednesday ahead of reports of what harm, if any, tropical storm
Isaac did to the crop along U.S. Gulf Coast.
The storm made landfall late on Tuesday and as they waited
for news, investors and traders bought up futures contracts for
the fiber.
The benchmark December cotton contract on ICE Futures
U.S. settled up 1.03 cents, or 1.4 percent, to settle at 76.65
cents per lb.
"We don't know as yet what the storm will do to cotton in
the delta," said Keith Brown, president of commodity firm Keith
Brown and Co. in Moultrie, Georgia.
"In the good old days, cotton would have been limit up, but
with the huge supply in the market these days, these things are
not as impactful as they used to be."
Hurricane Isaac lashed southern Louisiana with high winds
and heavy rains, and bore down on New Orleans, seven years to
the day after Hurricane Katrina devastated the city.
While the estimates are early and likely to rise, Isaac,
which reverted to the status of a tropical storm after making
landfall, appears to be a much less damaging event than 2005's
Hurricane Katrina -- the larger and more powerful cyclone that
hit the same region.
Grain export facilities on the Louisiana Gulf were shuttered
as the storm came ashore near the mouth of the Mississippi
River, a major shipping outlet through which almost two-thirds
of U.S. grain shipments flow every year.
U.S. cotton's December contract jumped 1.2 percent on Monday
on worries about the potential harm Isaac could cause to cotton
crops in Alabama and Mississippi -- two important states in the
U.S. cotton belt.
Donald Keeney, a senior agricultural meteorologist with the
Cropcast weather service -- widely followed by ag traders for
its global forecasts -- predicted there will be some wind and
flooding damage to the cotton areas mainly in northern Louisiana
and southeastern Arkansas.
The effects further north, in northeastern Arkansas,
northwestern Mississippi, and western Tennessee will likely be
quality declines on the open boll cotton, rather than output, he
told the Thomson Reuters Global Ags forum.
A cotton broker concurred with that view.
"If we had another storm there would be permanent damage,
but rain for two days is not as devastating," he said, adding
that sunshine could help dry out crops.
Farmers in the U.S. Mid-South and South East, used to heavy
storms during the hurricane season from June to November, may
have sped up harvesting of more mature crops ahead of the storm.
Fundamentally, the U.S. cotton market is well supplied, with
total output expected to grow 14 percent to over 17 million
bales in the marketing year to July 2012.
Traders say the global surplus in the textile market is also
expected to hit record levels.
While the supply situation is comfortable, investors have
struggled with conflicting market signals of late.
Some see potential for supply scares if weak monsoon rains
curb output in key cotton grower India, forcing the government
to restrict exports.
Hedge funds and other speculative investors doubled the size
of their net long position in U.S. cotton to 12,333 lots in the
week to Aug. 21, data from the Commodity Futures Trade
Commission showed.
That is the most bullish position for hedge funds in cotton
since February, and a dramatic turnaround from a net short just
three weeks ago that contrasts with the weak supply-and-demand
fundamentals.