NEW YORK, April 28 (Reuters) - U.S. cotton futures were
mixed by the end on Thursday, with nearby contracts falling and
later-dated futures firming after steep selling in day-earlier
business, but ample nearby supply was hurting May and July
fiber prices.

'We've had something of a meltdown in the market this week,
but today it did a little better. It was, of course, oversold,'
said Keith Brown of Keith Brown and Co. in Moultrie, Georgia.

Most-active July cotton on ICE Futures U.S. finished
1.37 cents lower at $1.5202, a 0.89 percent decline, after
falling to the downside limit a day-earlier.

New-crop December cotton was up 1.98 cents, or 1.59
percent, at $1.2658 cents a lb. at the close.

May cotton, which is undergoing deliveries, was down
2.07 cents, or 1.18 percent, to end at $1.7282 per lb.

Thursday began with open interest of 5,350 lots for the May
contract, only a slight decline from the 5,674 lots open as of
Tuesday. Yet, delivery notices issued to date have been light.

Many players sold cotton as a preventative measure on
Wednesday ahead of the U.S. Federal Reserves policy-setting
statement, in a move to take risk off the table.

When the Fed confirmed that it left its loose monetary
policy intact for an extended period, many participants saw the
sell-off as overdone and bought back cotton, along with many
other commodities.

'The selling was end-of-the month speculative liquidation,
fear about what Bernanke might say yesterday, and today's
export numbers showed some cancellations,' said Brown.

Further, supplies coming to the market from the Southern
Hemisphere--specifically, Brazil, Argentina and Australia--at
competitive prices hurt July prices.

But, cotton was able to regain strength in contracts dated
from October out through the rest of the board as many
participants rolled into new crop contracts.

'We continue to see old crop lose to new crop. We start
planting (new crop) in earnest in May, but in many locations
the crops are going to be put in some very dry dirt,' said
Brown, adding that some farmers are having to water their land
well ahead of time just to prepare for planting.

Texas, the U.S.'s largest producing state, has been hit by
drought that could affect the crop due in December.

Weather experts said Thursday, the devastating drought
intensified across Texas over the last week, with high winds
and heat causing 'massive crop losses,' with little relief seen
any time soon.

At the other extreme, the worst floods since 1937 are
expected to cause the Mississippi River to swell in about two
weeks that should peak in Memphis.

Further signs that the market is facing too much supply
came with the U.S. Department of Agriculture's weekly export
sales data, showing about 43,900 cancellations and marking the
fifth straight week of reduced sales.