NEW YORK, Dec 10 (Reuters) – Cotton futures sold off on Thursday after a weekly report showed a sharp drop in U.S. export sales, erasing gains from the prior session, which saw a bout of buying ahead of the release of the U.S.governmentΆs monthly supply and demand estimates.

That report was largely bullish, with the U.S. Department of Agriculture slashing its forecasts for U.S.and world production.

But the market had expected those changes and thus could not hold the 3-1/2-month highs it hit ahead of the report. That selling continued today, said Keith Brown, a Moultrie, Georgia-based cotton broker.

“The market, in its ability to anticipate, had anticipated, and so we break back,” Brown said, noting that ThursdayΆs export sales figures also prompted speculator selling. “They were looking for a good sales number to keep it up.”

March cotton on ICE Futures U.S. CTc1 CTH6 settled down 1.04 cent, or 1.6 percent, at 63.77 cents per lb. It traded within a range of 63.58 cents and 64.84 cents a lb.

U.S.export sales for cotton from the 2015-16 crop, which ends in July, totaled 78,700 bales last week, down 73 percent from the prior week and down 64 percent from the prior 4-week average.

Total futures market volume fell by 2,107 to 24,717 lots.

Data showed total open interest gained 5,303 to 197,077 contracts in the previous session.

Certificated cotton stocks CERT-COT-STX deliverable as of Dec.9 totaled 65,126 480-lb bales, down from 65,302 in the previous session.

The dollar index .DXY was up 0.60 percent. The Thomson Reuters CoreCommodity CRB Index .TRJCRB , which tracks 19 commodities, was down 0.29 percent.

(Reporting by Luc Cohen; Editing by Jonathan Oatis)