* USDA export report weighs on cotton futures
* Mill buying seen at market lows
NEW YORK, March 1 (Reuters) - Cotton futures settled lower Thursday as it declined for the second straight session as technically inspired investor sales kept the market on the defensive, analysts said.
Benchmark May cotton on ICE Futures U.S. dropped 0.77 cent to conclude at 89.67 cents per lb, trading from 89.46 to 91.49 cents.
Volume traded Thursday was around 17,100 lots, about 30 percent below the 30-day average, preliminary Thomson Reuters data showed.
"Cotton's got some demons," said Keith Brown, president of commodity firm Keith Brown and Co in Moultrie, Georgia.
The inability of May to race past the 93 and 94 cents area of resistance sparked another round of investor liquidation in the market, he said. Some mill buying emerged at the market's session low, traders said.
Some players were also discouraged by news that U.S. upland cotton sales in the weekly U.S. Agriculture Department export sales report were down 57 percent from the previous week at 76,200 running bales (RBs, 500-lbs each).
Brown added the market will still take its cues from the performance of global stocks, gold, crude and the grains market in the coming weeks.
"We're watching them (all)," he said.
Analysts said with the report out of the way, the market will turn its focus to the next USDA monthly supply/demand report due out March 9.
At the end of March, the USDA will then release its keenly awaited potential plantings report.
Open interest in cotton, an indicator of investor exposure, rose for a fourth session to 172,767 lots as of Feb. 29, from the previous session's 171,632 lots, ICE Futures U.S. data showed. (Reporting by Rene Pastor; Editing by Lisa Shumaker)