US cotton ends limit-up before USDA report

* March contract rallies by 4-cent limit
* Coming up: USDA supply data on Friday at 8:30 am EST

NEW YORK, Dec 9 - U.S. cotton futures finished up by their daily limit on Thursday on investor buying spurred partly by strong export sales and talk that Indian cotton exports may fall short of trade expectations, brokers said.

The benchmark March cotton contract on ICE Futures U.S. rose by the 4.00-cent limit to finish at $1.3595 per lb, with the session low at $1.2967.

Trading volume hit 13,340 lots, about two-thirds below the 30-day average of 35,361 lots, Thomson Reuters preliminary data showed. That would be the lowest daily volume since Oct. 6.

Cotton is the second-best-performing commodity in the Reuters-Jefferies commodity index so far in 2010, up nearly 70 percent in the year to date.

Mike Stevens, an independent analyst in Mandeville, Louisiana, said cotton futures climbed in part on technical buying by investors as the key March contract needed to fill a gap the expired December contract left behind at $1.38.

Fundamentally, the market received a boost from a report that India may miss its cotton export estimate of 5.5 million bales as well as a strong showing for U.S. cotton in weekly export sales data from the U.S. Agriculture Department.

U.S. cotton exports stood at 436,600 running bales (RBs, 500 lbs each), above trade forecasts ranging from 300,000 to 400,000 RBs.

The trade will now turn its focus to the USDA's monthly supply/demand report, particularly its cotton estimates for China, Pakistan and India.

"There should be a lot of tweaking on the numbers," Stevens said.

Another supportive factor for fiber contracts is the 25,857 bales decertified by the ICE Futures U.S. exchange because those supplies of cotton were immediately shipped to consumers.

Chinese cotton prices trickled lower, with the May cotton futures last done at 26,570 yuan per tonne, down 385 yuan on the day.

Further out, market players will turn to prospective spring 2011 cotton plantings in countries such as the United States and China.

Analytical firm Informa Economics upped its U.S. cotton plantings forecast for 2011 to 12.2 million acres, a four-year peak and nearly 12 percent higher than 2010 cotton sowings of 10.909 million acres.