(Reuters) - ICE cotton futures hit one-month highs on Thursday after a positive weekly exports sales report from the U.S. government suggested higher demand for the natural fiber, with prices further supported by a sagging dollar.

The December cotton contract on ICE Futures settled up 0.87 cent, or 1.28 percent, at 68.98 cents per lb. It traded within a range of 68.10 and 69.25 cents a lb, its highest since June 21.

"TodayΆs report is supportive for December futures," said Louis Rose, co-founder and director of research and analytics at Rose Commodity Group.

The U.S. Department of Agriculture early on Thursday reported net upland sales of 27,200 running bales for 2016/2017 crop year, up noticeably from the previous week. For 2017/2018 net sales of 166,200 were also significantly higher from the previous week.

Exports of 280,500 bales were up 44 percent from the previous week, the report showed.

"U.S. cotton exports are likely to remain strong. The improving macroeconomic environment in the U.S., EU and China should support demand," Societe Generale said in a note.

The dollar fell to its lowest in nearly two years against the euro on Thursday. The dollar index was down 0.49 percent.

"The dollar is sharply lower and the Chicago grains are higher which are lending some powerful support to cotton," said Keith Brown, principal at cotton broker Keith Brown and Co in Moultrie, Georgia.

U.S. corn and soybean futures rallied on Thursday to their highest respective levels in more than a week, supported by forecasts for hot weather that will stress crops in key growing regions, traders said.

"There's beginning to be some belief that the crop is not as robust as one might think. There been a lot of hail and there has been too much heat in some areas," Brown added.

Total futures market volume rose by 5,796 to 17,048 lots. Data showed total open interest gained 488 to 216,590 contracts in the previous session.