ICE cotton hit a seven-week high on Wednesday, driven by tight supplies and a strong U.S. cash market as prices pushed through buy stops.

The most-active March cotton contract on ICE Futures U.S. closed up 1.8 cents, or 2.2 percent, at 82.49 cents a lb after scrambling as high as 82.93 cents a lb as buy stops boosted trading volumes.

The contract breached, then closed below, its 100-day moving average of 82.77 cents a lb.

Exchange stocks fell to about 61,500 bales on Tuesday, the lowest level since mid-October, as traders pulled bales of high-grade cotton from the exchange to fulfill cash demand.

That was down from a peak of almost 237,700 bales in late November, according to exchange data compiled by Reuters.

Cold, wet weather has slowed the final leg of harvesting in key growing regions, and the U.S. Agriculture Department on Tuesday lowered its forecast for the U.S. crop slightly on reduced yields.

"A lot of the cotton coming in is below tenderable grade" and is not deliverable to the exchange, said Jobe Moss with MCM Brokerage in Lubbock, Texas.

The situation has left buyers and exporters scrambling for high grades of cotton in the United States, the world's top cotton exporter, even as global supplies are expected to reach a record by the end of crop year on July 31, 2014.

Traders said that the quotes for high-quality cotton in the cash market ranged from as low as a discount of 1 cent to 3 cents over the spot March contract, considered especially strong given the recent recovery in futures prices.

"There is a situation where supplies of superior grades of cotton are very tight," said Keith Brown, president of commodity firm Keith Brown and Co in Moultrie, Georgia.

The day's gains accelerated as prices climbed past key resistance levels.

The March contract breached and closed above the 38.2 percent and 50 percent Fibonacci retracement levels from an Oct. 3 high of 87.62 cents, driving renewed investor interest.

Speculators have been cutting a small net short position in cotton futures and options, last week's U.s. government data showed.