* Cotton on track for 3rd straight weekly drop
* Prices have fallen 12 pct since Aug. 16 rout
* Market awaits weekly export sales Friday
* USDA monthly crop report to come next week

NEW YORK, Sept 5 (Reuters) - ICE cotton futures hit fresh
three-month lows on Thursday as the long liquidation that has
knocked 12 percent off fiber's value in the past three weeks
continued and the dollar strengthened following upbeat U.S. jobs
data.
The most-active December cotton contract on ICE Futures U.S.
settled down 0.45 cent, or 0.50 percent, at 82.75 cents a
lb, its weakest since June 3. Prices are on track for a third
straight weekly drop.
"Cotton prices continued to slip today driven by long
liquidation," said INTL FCStone analysts, adding that Chinese
prices fell in sympathy with the U.S. market to their lowest
since July.
The most recent data showed that speculators slashed their
net long in cotton futures and options the most in at least a
year before the U.S. Labor Day holiday weekend.

The dollar rose against a basket of currencies after U.S.
data reinforced expectations that the world's biggest economy
continues on its slow-and-steady recovery and that the Federal
Reserve may rein in its massive bond-buying program.
Focus was also on U.S. jobless data due on Friday, which
dealers hope will provide insight into the Fed's next policy
move.
The data also fueled gains in equities and pushed treasuries
lower. The Thomson Reuters-Jefferies CRB index,
which includes 19 commodities, ended the day slightly higher.
The market awaited the weekly export sales data due on
Friday from the U.S. Department of Agriculture. Last week, the
data showed China canceled orders, raising concerns about demand
from the world's biggest textile industry.
Brokers expect Chinese mills to resume buying as prices fall
closer to 80 cents, although INTL FCStone analysts said the
interest is likely to be in Australian and Indian bales, rather
than U.S. fiber.
"At some point the cheaper prices will stir up meaningful
demand. However prices just don't seem cheap enough yet," they
said.
Dealers are also awaiting the monthly U.S. government supply
and demand report due next week. Last month's forecast for lower
U.S. and global output surprised the market and helped fuel a
speculator-driven rally.