Oct 16 (Reuters) -ICE cotton futures fell on Monday, taking cues from a retreat in oil markets and as focus returned to concerns about demand for the natural fiber from top buyer China.

* Cotton contract for December CTZ3 was down 0.8 cent, or 0.9%, at 85.26 cents per lb by 12:41 p.m. ET (1641 GMT).

* Oil futures fell on a report the U.S. and Venezuela could soon reach a deal to ease sanctions on Venezuela if a presidential election date is set, while traders see the Israel-Hamas conflict not affecting crude supplies in the short term. nL1N3BL0OQ

* Lower oil prices tend to subdue sentiment in cotton markets since they make polyester, a cotton substitute, less expensive.

* Traders also took stock of economic data released on Friday showing Chinese exports and imports continuing to decline, although at a slower pace.

* "Right now, the Chinese haven't been buying much cotton at all and they've got big economic problems over there, that's probably keeping the market under a little bit of pressure today," said Jack Scoville, vice president at Chicago-based Price Futures Group.

* "I do think demand is going to improve and China will end up having to buy it from the U.S. because Australia is going to have a tough time with El Nino," Scoville added.

* Limiting losses, the dollar index .DXY fell 0.3%, making cotton less expensive for other currency holders. USD/

* In the grain market, soybeans prices edged up while corn was almost unchanged as both markets awaited a clearer picture on the advancing U.S. harvest. GRA/
* Speculators cut net long position by 4,203 contracts to 34,015 in week to Oct. 10, data from the Commodity Futures Trading Commission (CFTC) showed on Friday. CFTC/

Reporting by Sherin Elizabeth Varghese in Bengaluru; Editing by Shounak Dasgupta