Oct 11 (Reuters) -ICE cotton futures held steady on Wednesday as demand concerns from key buyer China offset support from supply woes, while traders hunkered down for a key federal monthly supply-demand report.

* Cotton contracts for December CTZ3 was little changed at 85.48 cents per lb by 12:57 p.m. ET (1657 GMT).

* Market focus now turns to the U.S. Department of Agriculture's (USDA) World Agricultural Supply and Demand Estimates (WASDE) report due on Thursday.

* "Investors will hang their hat on whatever supply cut they're going to see in the data (WASDE) and ignore demand and say that it is going to get better, but demand has a good chance to get worse later on," said Louis Barbera, partner and analyst at VLM Commodities.

* "U.S. supply cuts don't really matter anymore, Australia and Brazil will now export more cotton than the U.S. particularly to China... Brazil has a chance to export more than the U.S. alone," Barbera added.

* The USDA in a weekly crop progress report on Tuesday said 32% of the cotton crop was in good to excellent condition compared with 30% last week.

* Oil prices fell as fears of disruption to supplies due to conflict in the Middle East receded a day after top OPEC producer Saudi Arabia pledged to help stabilize the market. Lower oil prices make polyester, a cotton substitute, less expensive. O/R
* In the grain market, Chicago corn, wheat and soybean futures edged lower as the markets turned their attention to widely followed U.S. government crop forecasts. GRA/

Reporting by Sherin Elizabeth Varghese in Bengaluru; Editing by Shailesh Kuber