ICE cotton drops as Texas rain forecast eases U.S. supply worry
* Cotton futures ease in light, range-bound trade
* December contract ends at 84.00 cents
* Finish was just below the 200-day moving average
* Fiber down 10 pct from August peak as speculators exit
NEW YORK, Sept 16 (Reuters) - ICE cotton eased on Monday under pressure from expectations of rain in Texas, the top producing state in the United States, where dry conditions have driven concern over supplies in the world's top exporter.
The most-active December cotton contract on ICE Futures U.S. edged down 0.46 cent, or 0.5 percent, to finish at 84.00 cents per lb.
Trading volumes were below average and second-month prices were down about 10 percent from a peak of 93.72 cents a lb set last month as speculators piled into the cotton market.
The December contract settled just below its 200-day moving average of 84.04 cents a lb.
Noncommercial dealers have cut their net long position in cotton to the lowest level since January, U.S. weekly government data showed on Friday.
Forecasts for rain in areas of Texas have reduced the weather risk premium that has been built into the market because of a U.S. crop expected both to be both late and small.
"There are some areas expected to see good rains. The market is looking to see how that materializes," said Christopher Narayanan, director and head of agricultural commodities research at Societe Generale.
U.S. supplies are expected to be tight this year as farmers have chosen to sow more lucrative grains and as unfavorable weather damages crop yields.
Even so, global output is expected to climb as No. 2 producer India harvests a bumper crop, and world supplies are forecast to reach a record of nearly 95 million bales by July 31.
Hopes for global demand rest largely with China, where a government stockpiling program launched in 2011 has driven voracious demand for foreign cotton.
Now, more than 60 percent of global inventories are expected to become part of China's stocks and are considered unavailable to the global marketplace.
Societe Generale analysts expect to see a slowing of Chinese cotton imports this year ahead of broader changes to the country's cotton policy next year.
The second month ICE contract was on track for a second straight quarterly loss, though prices are still up from the end of 2012.
Cotton prices posted two down years after historically high prices in 2011 drove demand toward lower-priced, synthetic fibers, and global inventories grew. (Reporting by Chris Prentice; Editing by Peter Galloway)
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