Jan 12 (Reuters) -ICE cotton futures pared most of their earlier gains on Friday after the U.S. Department of Agriculture's (USDA) monthly supply-demand report showed lower global consumption as China's estimated output of the natural fibre rose.

Cotton contracts for March CTc1 were steady at 81.4 cents per lb by 12:42 p.m. ET (1742 GMT) after climbing as much as 1% earlier in the session. It was up more than 1.5% for the week.

This year's first USDA World Agricultural Supply and Demand Estimates (WASDE) report trimmed 2023/24 projections for U.S. production by 342,000 bales to 12.43 million bales and expected U.S. ending stocks to be 200,000 bales lower at 2.9 million bales.

"The market is being slightly supported by the U.S. numbers but to counter that, the world numbers were a little bit bearish, mainly due to a half million bail increase in crop size in China," said Rogers Varner, president of Varner Brokerage in Cleveland.

The report lowered its outlook for world consumption in 2023/24 by 1.3 million bales and raised the global ending stocks forecast by 2 million bales, with top consumer China's production seen 500,000 bales higher.

"One thing that strikes me as bearish today are the negative numbers in corn and soybeans and there is a coattail effect on those markets. They're bearish and they're going to push the new crop prices down."

In the grains market, Chicago soybean futures climbed, but prices were still set for a fourth straight weekly loss owing to weak demand for U.S. exports and an improved supply outlook. GRA/

The USDA weekly export sales report on Thursday showed shipments of 228,100 running bales in the week ending Jan. 4, while net sales for 2023/2024 doubled from the previous week to 262,500 bales. EXP/COT

Exports have stayed strong above 200,000 bales in the last four reports, hovering close to the marketing-year record of 231,000 bales hit in the week of Dec. 21.

Reporting by Deep Vakil, Ashitha Shivaprasad and Anushree Mukherjee in Bengaluru; Editing by Shailesh Kuber -