NY cotton recovers slightly from bearish USDA report

* Prices lost 7 pct after USDA's report
* Bounce may not last as bearish sentiment lingers - trader
* Chinese imports surge 150 pct in July

NEW YORK, Aug 14 (Reuters) - Cotton prices were higher on
Tuesday, recovering some ground lost after a bearish U.S
government supply-and-demand report last week, as the market
news of a 150-percent surge in imports to China, the world's
largest producer and consumer, in July.
The benchmark December cotton contract on ICE Futures
U.S. rose 0.55 percent to settle at 72.09 cents per lb, snapping
two days of losses. It eased off an intraday high of 72.98 cents
hit earlier in the session.
Traders said a small bounce back was inevitable after the
hefty 7-percent drop over two days following the USDA's monthly
report on Friday, which forecast a record stock level for the
2012/13 marketing year.
But they don't expect the gains to last.
Forecasts of a growing surplus to record highs by next July
and waning demand will exert further pressure on the market,
which could test the 70-cent mark, traders said.
"The USDA numbers were so negative, you couldn't fight it,"
said a floor trader. "I think the market will drift down
further. It will test (70 cents)."
Prices will likely remain between 69 cents and 76 cents over
the coming months, he said, in-line with its range of the past
week. Cotton was briefly below 70 cents at the end of July.

SURGING IMPORTS
China imported 406,000 tonnes last month as textile mills
sourced material outside the country as the government bought up
local supplies as part of its stockpiling program.
That brought shipments in the first eleven months of the
2011/2012 crop year to 5.13 million tonnes, more than double the
2.37 million tonnes recorded in the same period last year.
While Chinese buying has been a key support for prices in
the past year, concerns are mounting that imports may slow if
mills cannot secure licenses to import material.
Around 800,000 to 1 million tonnes of cotton are sitting in
bonded warehouses in the country waiting to be cleared through
customs, but many mills have exhausted their quotes.
Shippers are now hoping that the government will issue more
ad hoc quotas to help textile mills.

EL NINO IMMINENT
The market also remained on weather watch after Australia's
forecasters warned there were clear signs that the feared El
Nino phenomenon was developing in the eastern Pacific. Most of
the country's cotton-growing land is irrigated, lessening the
possibility of damage to crops from heat and drought.
But the market is already on high alert after delayed and
weak monsoon rains in India that are so vital for crop
development. That has raised concerns that India, the world's
second-largest producer, may restrict exports, a move it has
taken in the past to ensure domestic supplies.
Cotton bucked the weaker trend across grains, but followed
the broader equities market after better-than-expected U.S.
retail sales for July boosted confidence in the recovery of the
world's largest economy.

(Reporting by Josephine Mason; Editing by Phil Berlowitz)