April 16 (Reuters) -ICE cotton fell on Tuesday, hurt by long liquidation, while a stronger dollar and downbeat sentiment across related markets also pressured the natural fiber.

* Cotton contract for May CTc1 eased 2.2 cents, or 2.7%, to 80.73 cents per lb by 12:05 p.m. ET (1605 GMT)

* Prices are down due to long liquidation, said Rogers Varner, president of Varner Brokerage, in Cleveland, adding that the market is shaking off some of the enthusiasm from a couple of months ago and making a run to try to get the specs out of the market.

* "Another thing pushing the market down is rising cert stocks and that can be applied against the contract. Those stand at 166,000 bales and that's up from only 1,000 a few months ago," Varner added.

* The dollar index .DXY rose about 0.1%, making cotton more expensive for overseas buyers.

* The U.S. Department of Agriculture's (USDA) weekly export sales report last week showed net sales of 81,500 running bales for 2023/2024, down 4% from the previous week and 10% from the prior four-week average. EXP/COT

* In the grains market, Chicago wheat futures extended their fall for a second consecutive session as a strengthening dollar and huge exports of cheap grain from Russia continued to pressure prices and trade near their lowest since 2020. GRA/

* Oil prices were largely steady after the U.S. announced plans to hit Iran with new sanctions after its weekend attack on Israel, and as Israel's war cabinet is also set to meet for the third time in three days. O/R

* Lower oil prices make polyester — a cotton substitute — less expensive.

Reporting by Anjana Anil in Bengaluru; Editing by Shilpi Majumdar