Cotton futures fell on Monday ahead of the US Department of Agriculture's (USDA) supply and demand report, while lack of clear signs in US-China trade negotiations weighed on investor sentiment.

Cotton contracts for March fell 0.49 cent, or 0.74%, to 65.51 cents per lb by 1:10 p.m. ET (1810 GMT). However, it rose to 66.25 cents earlier in the session, a level last seen on June 19.

The Dec. 15 deadline for new tariffs on Chinese goods is coming up and the market is a little wary of that, said Bailey Thomen, cotton risk management associate with INTL FCStone. “We also have the WASDE report coming out tomorrow from the USDA, so I think the markets are a little bit hesitant ahead of that."

China said on Monday that it hoped to make a trade deal with the United States as soon as possible, amid intense discussions before the fresh US tariffs on Chinese imports are due to kick in at the end of the week.

Washington and Beijing are negotiating a “phase one" deal aimed at de-escalating their prolonged trade dispute, but it is unclear whether such an agreement can be reached in the near term.

Investors were also focused on the US Department of Agriculture's (USDA) monthly world agriculture supply and demand estimates (WASDE) report due to be released on Tuesday. Meanwhile, ICE cotton speculators raised their net short position by 4,645 contracts to 21,927 in the week to Dec. 03.

Total futures market volume fell by 11,920 to 22,458 lots. Data showed total open interest fell 455 to 196,834 contracts in the previous session. Certificated cotton stocks deliverable as of Dec. 6 totaled 41,625 480-lb bales, down from 57,469 in the previous session.