NEW YORK, Jan 27 (Reuters) - U.S. cotton futures settled
higher Thursday on renewed speculative and fund buying boosted
in part by a government sales report, but profit-taking knocked
the market off its new record highs, analysts said.

The cotton market has risen over 22 percent since 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.

Cotton's fresh rally made it the early leader of
commodities in the Reuters-Jefferies commodity index in 2011,
as it rose 17 percent year to date. In 2010, cotton was the
best performing commodity as it went up over 90 percent.

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

The key March cotton contract on ICE Futures U.S.
rose 2.56 cents to finish at $1.6939 per lb, having traded up
the 6-cent limit at a new record top of $1.7283. The session
low was at $1.6625.

Total volume stood at over 35,000 lots, almost double the
30-day norm, Thomson Reuters preliminary data showed.

'I think we made some kind of meaningful high today, but we
won't know until a few days from now,' said Sharon Johnson,
senior cotton analyst for brokerage Penson Futures in Atlanta,
Georgia.

Mike Stevens, an independent cotton analyst in Mandeville,
Louisiana, said chart-based market players apparently had a
technical objective at $1.70, basis the March cotton contract.

Once the market raced past that level early in the session,
the rally in cotton seemed to lose steam.

'It's spec profit-taking because we reached a technical
objective,' said Stevens.

The market hit its 6-cent limit up shortly after the U.S.
Agriculture Department released its weekly export sales data.

USDA said total U.S. cotton sales reached 532,500 running
bales (RBs 500-lbs each), above trade expectations it would
range from 200,000 to 300,000 RBs and last week's total sales
at 457,500 RBs.

'We couldn't close limit-up despite bullish information,'
Johnson said in referring to the USDA data.

The market also got a partial boost from strong Chinese
cotton prices.

The key September cotton futures on the Zhengzhou
Commodity Exchange was last done at 32,635 yuan per tonne, up
1,300 yuan.

Analysts said that Chinese cotton market players are
disappearing from cotton trading as they leave for the Lunar
New Year holidays early next month.

With the USDA sales data done, the market's attention
should 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.