* Market settles over $1 level for first time since 1995

 * USDA sales report buoys market bulls

 * Long Chinese holiday may becalm business

 (Adds closing prices in cotton, writes through)

 NEW YORK, Sept 30 (Reuters) - Cotton futures ended higher
on Thursday in heavy trading and finished the quarter up 33
percent, its best quarterly performance since 1994.

 Cotton rebounded from Wednesday's limit-down move on buying
by mill and investment funds, with business seen turning quiet
due to a long holiday in top consumer China, analysts said.

 Cotton has rallied nearly 50 percent since late July and
hit a 15-year high, fueled by robust demand, tight stocks and
buying from investment, hedge and long-only funds that felt the
market was undervalued.

 "Cotton seems to be getting an exception from the beating
other markets are getting," said Sterling Smith, an analyst for
brokers Country Hedging Inc in Minnesota.

 ICE Futures U.S. key December cotton contract CTZ0 rose
0.68 cent to finish at $1.0192 per lb. The contract traded from
99.29 cents to $1.0353 -- the eighth time in nine sessions
cotton breached the psychological $1-a-lb level.

 <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

 Graphic showing CRB Q3 performance:        

    link.reuters.com/huw48n

 Graphic showing CRB YTD performance:

    link.reuters.com/kew48n

 TAKE A LOOK on cotton [ID:nN20273787]

 Major factors in cotton rally to 15-year top           

    [ID:nN24457962]

  ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

 Volume traded in the cotton market reached just under
25,000 lots at 2:46 p.m. EDT (1846 GMT), almost 50 percent
above the 30-day average at 16,500 lots, preliminary Thomson
Reuters data showed.

 The early fall in the market provided mills still short of
supplies the chance to book their orders under $1 a lb.

 "Mills like double digit prices, not triple digit (cotton
values)," said Ron Lawson, cotton expert for brokers
logicadvisors.com in Sonoma, California.

 People are wary about taking short positions in cotton
given how strong consumer buying is in the market, said Bill
Raffety, an analyst for commodity futures brokerage Penson
GHCO.

 "The demand is still there," he said.

 The market was buoyed in part by U.S. Agriculture
Department's weekly export sales report on Thursday.

 Total U.S. cotton sales reached 576,600 running bales (RBs,
500-lbs each), from 571,700 RBs in last week's data and trade
belief it would range from 250,000 to 400,000 RBs.

 Lawson said the report shows that even at higher prices,
mills are booking cotton orders.

 The market took particular note of a survey by Thomson
Reuters of Chinese analysts that the country's cotton ending
stocks for 2010/11 were around 2.0 million tonnes, much lower
than the USDA estimate of 3.49 million tonnes. [ID:nBJI002396]

 "Not only was the export number bullish but the survey of
Chinese traders concerning their ending stocks was a real
attention getter," said a report by independent cotton analyst
Mike Stevens in Mandeville, Louisiana.

 "The average guess was 9.184 million bales while USDA shows
16.01 for 2010/11. The highest guess was still 2.5 million
bales below USDA," he added.

 Analysts said the market may drift through the end of the
week because several players will be going to Liverpool to
attend an industry conference.

 More importantly, players in No. 1 cotton producer and
consumer China will be on holiday from Oct. 1-7.