* Losses in stocks, grains deflate fiber contracts
* Market eyes weekly USDA export sales data
NEW YORK, July 24 (Reuters) - Cotton futures settled lower Tuesday on
speculative fund sales as sharp falls in world stocks and the grains complex
spilled over into the fiber market, brokers said.
Stock markets tumbled as rising Spanish bond yields drove Spain closer to a
full-scale bailout in the latest chapter of the euro zone debt crisis.
U.S. corn and soybean dropped their daily trading limits as forecasts of
rain sparked a sell-off in the grains complex.
The benchmark December cotton contract on ICE Futures U.S. fell 1.16
cents or 1.6 percent to end at 71.03 cents per lb, trading from 70.55 to 72.69
cents.
Volume traded on Tuesday stood near 15,900 lots, more than 50 percent under
the 30-day norm, Thomson Reuters data showed.
"When we started to slip because of the outside markets, it was easy for the
guys to go to the sidelines," said Mike Stevens, an independent cotton analyst
based in Mandeville, Louisiana. "It was an easy decision (by investors) to
exit."
December tested the lower end of the trading band near 70 cents, held and
then came back late on speculative buying.
Analysts said market participants awaited the release of the U.S.
Agriculture Department's weekly export sales report on Thursday to gauge the
level of demand for cotton.
On Friday, the market will digest the remarks of Joe Nicosia, president and
chief executive of Allenberg Cotton Co, the world's biggest cotton merchant.
Nicosia will be speaking at the Ag Market network. Allenberg is a wholly owned
unit of trading giant Louis Dreyfus.
Dreyfus is facing a lawsuit filed by a former trader of manipulating the
cotton market. The case is pending.
Open interest, an indicator of investor interest in a market, stood at
173,604 lots as of July 23, the exchange said.
Volume traded on Monday amounted to 15,040 lots, according to ICE Futures
data.