NEW YORK, July 7: Cotton futures ended strong on Friday, posting a new contract peak and roaring to 3-1/4 year highs, and while traders said the tops were in overnight, the weekly US exports report sustained the support.

Cotton has recorded new contract highs on each of the last two Fridays. Prices shot up on the opening, lead by electronic trading, and inspired by a sharp overnight rally in the Chinese markets and worries about health of the Pakistani crop, said Mike Stevens of Swiss Financial Services in Louisiana.

The New York Board of Trade's key December cotton contract settled with 0.74 cent gains at 64.63 cents a lb. In early business, it raced up to a contract top at 64.90 cents, last seen on April 2004 on a continuation chart basis.

Most of the rest also set new life-of-contract highs, ending from 0.10 to 0.87 cent higher.

On Intercontinental Exchange's NYBOT electronic cotton market ,December cotton also set a new contract high at 64.90 cents a lb. By 5:23 p.m. EDT (2123 GMT), the contact remained 0.70 cent firmer at 64.59 cents a lb.

The US Department of Agriculture's weekly cotton export sales data, delayed by the US holiday on Wednesday, were released Friday before the open, adding an early price lift.

They didn't hurt the market any, because it disarmed those who are sceptical about whether we are going to make the USDA export projections. They were very good sales numbers and great shipments, said Stevens.

The report showed upland and pima shipments totaled 481,400 running bales in the week.

Sales to be shipped on or before July 31 are tapering off as they should be. We've already sold the 13 million bales the USDA says we're going to ship, but now we have to ship them.

With shipments like today we will meet or exceed what is needed to reach USDA projections, said Stevens of Swiss Financial Services.

The latest weekly USDA also put net upland cotton sales at 206,400 running bales, 3 per cent above the previous week, but 3 per cent below the prior four-week average. Net sales of 37,600 RB for 2007/08 delivery were primarily to China with 35,000 RB.

Net American Pima sales of 4,000 RB were mostly bound for Japan at 1,700 running bales, then India and Pakistan.

Some analysts cast doubt on cotton's ability to maintain their current lofty prices, saying they are substantially overbought. But other said prices may not need to correct much as players compare their value relative to other crops competing for cotton acreage.—Reuters