NEW YORK, Jan 28 (Reuters) - U.S. cotton futures closed
sharply lower Friday on profit-taking and end-of-the-week
liquidation as players cashed in their gains after the market
hit new record highs this week, analysts said.

Stumbling grains prices and fears the unrest in Egypt may
lead to macroeconomic weakness also weighed on fiber contracts,
they said.

The key March cotton contract on ICE Futures U.S.
fell 4.64 cents to finish at $1.6475 per lb, trading from
$1.6451 to $1.711.

Total volume stood around 23,700 lots, about a quarter
above the 30-day norm, Thomson Reuters preliminary data
showed.

'It's end-of-the-week liquidation to be sure,' said Keith
Brown, president of commodity firm Keith Brown and Co. in
Moultrie, Georgia.

But cotton's weakness is also due in part to worries the
Egyptian crisis 'could be a contagion and start spreading' to
affect the macroeconomic outlook of financial markets, Brown
said.

With that in mind, traders said many investors opted to
cash in whatever gains they have rung up in cotton futures to
see what happens in Egypt this weekend.

Cotton futures had risen over 22 percent in a fresh rally
that began in the middle of January, inspired by strong cotton
prices in top consumer China and partly on tight deliverable
stocks of cotton on the ICE Futures U.S. exchange.

The rally made cotton the early leader of commodities in
the Reuters-Jefferies commodity index in 2011, as it rose 13.8
percent year to date. In 2010, cotton was the best performing
commodity as it went up over 90 percent.

(Graphic: http://link.reuters.com/kew48n)

The market also saw selling on the spread, or difference,
between the spot contract and back months.

Next week, analysts said the market may turn quiet in part
because players from No. 1 cotton producer and consumer China
will be taking off to celebrate the Lunar New Year.

The key September cotton futures on the Zhengzhou
Commodity Exchange was last done at 32,230 yuan per tonne, down
100 yuan on the day.

The market's attention would also turn toward a report on
potential U.S. 2011 cotton plantings. That forecast will be
released on Feb. 4 by industry group the National Cotton
Council of America at its annual meeting in San Antonio,
Texas.

A Reuters survey at the Beltwide Cotton conference this
month had forecast U.S. 2011 cotton plantings from 12.48
million to 12.53 million acres, a five-year high and an
increase of around 15 percent from last year's cotton sowings
of 11.04 million acres.