* Prices ease under harvest, investor selling pressures
* Options-related dealings ahead of Friday expiry weigh
* Dealers eye return of USDA's crop report, increased output forecasts
NEW YORK, Nov 4 (Reuters) - ICE cotton eased again on Monday, marking a 12th straight daily loss as prices continued to wilt under pressure from investor selling, expectations of excess supplies, and concerns over waning demand from top consumer China.
The most-active December cotton contract on ICE Futures U.S. slipped 0.63 cent, or 0.8 percent, to settle at 75.95 cents a lb and touched as low as 75.85 cents a lb, the weakest level since January.
Options-related trade and index fund rolling added pressure to the December prices, with December contract options due to expire on Friday, dealers said.
With a 14-day relative strength index below 21, the spot contract was the most technically oversold it has been since May 2012.
"The market isn't giving the specs any reason to quit selling, and December is in liquidation mode," said Sharon Johnson, a cotton specialist with KCG Futures in Atlanta.
The most recent release of delayed U.S. government data has shown that noncommercial dealers have slashed their net long position in cotton futures and options to the lowest levels since January.
The U.S. Agriculture Department (USDA) is set to release its monthly crop report on Friday after skipping last month's report due to funding issues and a partial government shutdown.
Expectations have grown that the USDA may again boost its forecast for output in No. 2 producer India and also raise its production expectations for the United States, the world's top exporter.
Weekly U.S. government data released after the close showed the U.S. harvest continued to gather pace.
While China has stepped up the pace of buying for its strategic reserves after a slow start to buying this year, concerns have mounted over slowing demand in the world's top textile market.
Rumors over changes to the China's government stockpiling program circulated through the marketplace and continued to weigh on prices, dealers said.
Launched in 2011, the stockpiling policy has propped up global cotton prices as it has driven voracious demand for foreign cotton.
Dealers eyed updates from China's reserve on when it will begin to auction cotton and at what discount.
"I hear they're going to start selling the reserve at a lower price and from the middle of this month," said one industry source.
The price at which China decides to release from its huge reserves could stymie import demand.
ICE stocks climbed to 156,183 bales on Friday, up from 149,793 previously and now at the highest levels since July, the most recent ICE data showed. (Reporting by Chris Prentice)
