By Duane Howell, DTN Cotton Correspondent

Cotton futures traded with modest losses Friday as U.S. stock futures slid and the dollar climbed as lawmakers prepared to resume a last round of talks to avoid the fiscal cliff before a New Year deadline.

The market, which already had traded below lows of the prior three sessions, showed muted initial reaction to U.S. export sales data.

Spot March hovered off 41 points to 75.60 cents at 8:06 a.m. CST, trading within a 70-point range between 73.51 and 76.01 cents on a contract volume of 2,151 lots.

Net all-cotton export sales for delivery this season dipped to 298,000 running bales during the week ended Dec. 20 from 337,700 bales the week before. Upland net sales of 283,300 bales were down 15% from the prior week and from the previous four-week average.

China bought 146,200 running bales of upland or 52%, followed by 58,500 bales by Turkey, 14,700 by South Korea and 13,900 by Thailand. Gross sales were 286,000 bales and cancellations were 2,700 bales.

All-cotton shipments edged up to 187,200 running bales from 175,800 bales the previous week. Upland exports of 174,600 bales were up 3% from the week before and 1% from the prior four-week average.

Net sales of 3,900 running bales for delivery in the 2013-14 were up from 2,600 bales the week before. This brought sales for both crop years to 301,900 bales, down from 320,300 bales the week before.

In outside markets, Dow Jones futures traded down 67 points and S&P futures down 8.75, while dollar index futures rose 0.101 to 79.820, crude oil edged up 4 cents to $90.91, Brent crude fell 24 cents to $110.56 and gold was about flat, down 40 cents at $1,662.30. Corn traded slightly lower, while soybeans and wheat were higher.

ChinaΆs Zhengzhou cotton futures settled lower, down 110 yuan or 0.54% in January and 160 yuan or 0.03% in most-active January.

In the U.S. market Thursday, March settled below the prior-session low after nudging three ticks above WednesdayΆs high.

The March-May spread traded between premiums on May of 68 and 42 points and widened 10 points to close at 62 points on a volume of 1,447 lots. May-July traded between premiums on July of 83 and 31 points and widened 24 points to settle at 77 on a volume of 644 lots, while JulyΆs settlement discount to December widened 19 points to 109 points.

In cash trading, grower-to-business sales slipped to 12,047 bales from 14,362 bales on The Seam. Prices fell to an average of 68.28 cents from 69.85 cents as premiums over loan repayment rates edged up to 17.18 cents from 17.04 cents.

Business-to-business trading increased to 1,419 bales from 1,016 bales on prices averaging 62.92 cents, down from 72.57 cents, and premiums of 17.20 cents, down from 18.31 cents.

The grower sales included 8,166 bales of staples 35 or more and 3,881 bales of staples 34 or less, while business sales included 1,142 bales and 277 bales, respectively.

Growers sold 551 bales from the Southeast and 11,496 bales from the Southwest. All the business sales were from the Southwest.