NEW YORK, Apr 07, 2010 (Dow Jones Commodities News via Comtex) -- The U.S. Department of Agriculture is expected to bump up its estimate for U.S. cotton exports and cut the 2009-10 production outlook in a report due Friday, as robust demand chips away at thinning supplies.

The USDA is scheduled to release its April supply and demand report Friday at 8:30 a.m. EDT.

Analysts surveyed by Dow Jones Newswires said the USDA would lower its forecast for 2009-10 cotton production to 12.28 million 480-pound bales from the 12.40 million projected last month.

On March 25, the USDA pegged U.S. 2009 cotton ginnings at 12.15 million bales in its final cumulative report for the year.

Analysts said the USDA will trim its domestic output projection in the April report in line with that ginnings data.

The 2009-10 crop took a major hit as frequent rains damaged yields and quality and delayed harvest in much of the Delta and Southwest.

Cotton exports for the 2009-10 marketing year will rise to 12.05 million bales from 12 million bales estimated last month, analysts said.

"Considering U.S. shipments typically accelerate in the second half of each marketing year as other countries' exportable supplies dwindle, U.S. cotton now is on track to exceed the latest USDA forecast," said Gary Raines. Raines' 2009-10 U.S. cotton exports estimate of 12.20 million bales was the highest of analysts surveyed.

The 2009-10 cotton marketing year ends July 31.

Expectations for an economic rebound have triggered cotton demand as mills jump to meet textile manufacturers orders, analysts said. Textiles are one of the first purchases to return to household budgets that have been cut back in tough times marked by high unemployment, but tight credit situations have forced overseas textile mills to buy cotton in a hand-to-mouth pattern.

The U.S. is the top world cotton exporter and the No. 3 producer behind China and India.

Season-to-date U.S. exports stand at just over 6.8 million 480-pound bales, Raines said. Shipments need to average about 272,000 bales per week for the 19 remaining weeks of the season to reach the USDA's forecast, he said.

Analysts said the USDA would leave its estimate for 2009-10 domestic cotton consumption unchanged at the 3.5 million bales estimated last month.

As an effect of lower output estimates and higher exports outlooks, analysts said the USDA would trim its 2009-10 cotton ending stocks projection to 3.05 million bales from the 3.20 million bales forecast in April.