* Cotton declines for 5th straight trading day
* Cotton trade awaits USDA supply/demand report Thursday

NEW YORK, May 7 (Reuters) - Cotton futures extended their
5-1/2 month low on Tuesday, in their fifth consecutive day of
lower closes, ratcheting down as the weather in U.S. cotton
regions continues to improve.
"It just keeps grinding down with the weather forecast
turning so favorable for West Texas and Georgia both with
beneficial rains," said Mike Stevens, an independent cotton
analyst in Mandeville, Louisiana.
He said rain has been showering cotton growing areas with
more expected on Tuesday night, which is keeping pressure on
cotton prices.
July cotton on the ICE Futures U.S. exchange settled
lower by 0.49 cent, or 0.57 percent, at 86.18 cents per lb,
spanning a range from 86.06 to 87.45 cents per lb.
It was the lowest finish for the second-position cotton
contract since late December 21, 2011, according to Thomson
Reuters data.
Volume was moderate at 14,196 lots by late day.
New-crop December lost 0.40 cent to end at 84.33
cents a lb and traded from 84.13 to 85.58 cents. Volume came to
5,217 lots by the end.
He said, the selling came mostly from speculators with the
industry trade covering short positions on the downside break.
With little bullish news on the horizon, Stevens said most
players would remain cautious heading into the monthly USDA
report due Thursday.
It will be the first time the U.S. Department of Agriculture
releases its outlook for crop conditions in the 2012/13
marketing season (August/July).
Most market participants will stay sidelined ahead of USDA's
much-watched supply/demand report due Thursday at 8:30 a.m. EDT
(1230 GMT).
Tuesday's estimated volume came to 20,045 lots, about a 30
percent lower than the 30-day average, according to Thomson
Reuters data.
As of May 7, cotton's open interest rose by 355 lots to
184,069 lots as of May 4, ICE Futures U.S. exchange data showed.