May 30 (Reuters) - ICE cotton futures settled marginally lower on Tuesday on increased production of natural fiber with federal data showing strong progress in the U.S. cotton harvest.

The U.S. Department of Agriculture's weekly crop progress report released earlier in the day showed that 63 percent of cotton crops were harvested in the United States by the week ended May 28, up from 52 percent in the previous week.

"The crop is getting planted very nicely in the Northern Hemisphere without any major disruptions," said Keith Brown, principal at cotton broker Keith Brown and Co in Moultrie, Georgia.

The December cotton contract on ICE futures U.S. settled down 0.04 cent, or 0.1 percent, at 72.75 cents per lb. It traded within a range of 72.33 and 72.77 cents a lb.

Meanwhile, the July cotton contract on ICE Futures U.S. touched a two week low of 76.90 cents per lb. July prices have fallen about 12 percent since touching a near 3-year peak of 87.18 cents mid-May.

"Ever since the July market peaked on May 15, open interest has been declining, and so has the prices, which tells me that those are long positions that are getting liquidated," Brown said.

Total futures market volume rose by 3,674 to 22,066 lots. Data showed total open interest fell to 241,984 contracts in the previous session.

Elsewhere, speculators cut their bullish bet in cotton by 8,532 contracts to 97,141 contracts in the week ended May 23, U.S. Commodity Futures Trading Commission data showed on Friday.

(Reporting by Karen Rodrigues in Bengaluru; Editing by Diane Craft)