* Speculation mounts that Beijing will soon begin reserve auctions
* Spot prices ease to lowest levels since January
* Dealers eye USDA's monthly crop report due Friday
NEW YORK, Nov 5 (Reuters) - Cotton futures moved down a smidgen on Tuesday, marking their 13th straight down session, as speculation built that China's government may soon start selling from its mammoth reserves and cut demand for foreign fiber in the world's top consumer.
The most-active December cotton contract on ICE Futures U.S. closed down 0.01 cent, or 0.01 percent, at 75.94 cents a lb.
Spot prices eased to an intraday low of 75.27 cents, the weakest level since January.
Rumors circulated that Beijing may soon begin selling its stocks and may be planning other policy changes that would leave the world flooded with excess cotton supplies.
A government stockpiling program launched in 2011 has driven voracious demand for foreign fiber, put a floor under global cotton prices, and left China with a growing hold on global inventories.
"The market is moving down because people perceive that China is changing its policy, that they are going to reduce the selling price of the reserves, and that they will limit imports," said Jerry Marshall of Yiyang Trading in Memphis, Tennessee.
The December contract recovered much of the day's losses during a flurry of options-related dealings ahead of Friday's options expiration, dealers said.
Mill buying was also underpinning the market, dealers said.
Though mills have been active buyers in recent weeks, fiber has plunged 18.6 percent from August highs near 94 cents as speculators have fled the cotton market.
With a 14-day relative strength index at about 21, spot prices are at the most technically oversold levels since May 2012.
China has begun a closer scrutiny of trading practices, cracking down on two firms that sold imported cotton to the reserves.
The country is considering an overhaul of the controversial cotton program and plans to switch to crop subsidies likely from the start of the 2014/15 crop year, Reuters previously reported.
New York futures prices have also been under pressure as harvests gather pace in the Northern Hemisphere.
Dealers said they expected the U.S. Agriculture Department may boost its output forecasts for the United States, the world's top exporter, and No. 2 producer India in Friday's monthly crop report.
Traders braced for heavy volume and volatility on Friday, with the USDA report due, December options set to expire, and index fund rolling underway.
December's discount to March decreased to 2.09 cents a lb from 2.28 cents previously, with the spread narrowing for the first time in over a week. (Reporting by Chris Prentice; Editing by James Dalgleish)
