* Tight supplies, steady demand boost cotton
* Market at loftiest level since early March

NEW YORK, March 27 (Reuters) - U.S. cotton futures settled
on Tuesday at a fresh three-week high on chart-based speculative
buying and worries brisk U.S. cotton sales could lead to a
tighter supply situation in the weeks ahead, analysts said.
The benchmark May contract on ICE Futures U.S. rose
1.68 cents, or almost 2 percent, to end at 92.59 cents per lb,
dealing from 90.41 to 93.18 cents. It was the loftiest close on
the spot cotton contract since early March.
Volume traded amounted to nearly 33,200 lots, about a third
over the 30-day norm, Thomson Reuters data showed.
"It's a little bit of short-covering anxiety," said Keith
Brown, president of commodity firm Keith Brown and Co in
Moultrie, Georgia.
He said the buying may have been sparked in part by talk the
government may have to raise its estimate of U.S. cotton exports
and this could lead to a further drawdown in a tightly supplied
market.
In its March supply report, the U.S. Agriculture Department
forecast U.S. 2011/12 cotton exports at 11 million (480-lb)
bales. Traders said this may have to be raised by a 100,000 to
300,000 bales.
Technically, the market traded over the 100-day moving
average around 92.59 cents, sparking more fund buying in fiber
contracts.
Brown said there was also talk of dry conditions in China,
the world's top producer and consumer of cotton.
Analysts said many market players will likely begin evening
up their positions the next few sessions ahead of the release of
the USDA's annual potential plantings report for crops such as
cotton, corn, soybeans and wheat on Friday.
In early February, the industry group National Cotton
Council had pegged U.S. 2012 cotton sowings at 13.63 million
acres (5.5 million hectares), down 7.4 percent from 2011 cotton
plantings of 14.72 million acres.
Another dealer said cotton futures have found strong support
at 87 cents, basis May, because it is an area where mill and
trade buying has shown up and propelled fiber contracts up.
Open interest, an indicator of investor exposure, fell for
the first time after it had risen 12th straight session. It
stood at 190,776 lots as of March 26.
On Friday, the open interest in the cotton market was at
190,909 lots, the highest since Feb. 9, ICE Futures U.S. data
showed.