Oct 1 (Reuters) - ICE cotton futures settled higher on Tuesday, after earlier slipping over 1% as improved harvest for the U.S. crop added to higher output expectations, with markets cautiously awaiting the trade talks between U.S. and China next week. 

* Cotton contract for December settled up 0.25% at 60.98 cents per lb. 

* Prices had earlier declined over 1% to a session low of 60.20 cents per lb. 

* "Somebody may have wanted to take some positions. It's kind of unusual to buy on the first day of the month and there's a little bit more positive action in the grain markets," said Sid Love, commodity trading adviser at Kansas-based Sid Love Consulting. 

* "As Chinese bought 20-25 cargoes of U.S. soybeans, there seems to be a little more optimism and that goes over into cotton as well." 

* U.S. soybean futures prices rose to the highest in more than two months on Tuesday on China buying. 

* "There is lack of interest in the (cotton) market as people are holding out. At this point, they are waiting for the trade talks coming up later this month," said Bailey Thomen, cotton risk management associate with INTL FCStone. 

* Lack of demand, as well as the drawn-out, tit-for-tat tariff war between the United States and China, have pushed cotton prices down about 17% so far this year. 

* The World Trade Organization cut its forecast for growth in global trade this year by more than half on Tuesday and said further rounds of tariffs and retaliation, a slowing economy and a disorderly Brexit could squeeze it even more. 

* The weekly crop condition report released by the U.S. Department of Agriculture (USDA) on Monday showed 16% of cotton was harvested compared with 11% a week ago. 

* "With respect to supply and demand, while we believe the U.S. crop will prove to be significantly smaller than the USDA's latest estimate. It will likely be large enough to be considered bearish," Louis Rose, director of research and analytics at Tennessee-based Rose Commodity Group, said in a note. 

* Meanwhile, monsoon rains in India were 10% above average in 2019 and the highest in 25 years as seasonal rainfall continued longer than expected, the weather department said on Monday. Heavy rainfall in some areas has damaged summer-sown crops like cotton, soybean and pulses that are close to harvest. 

* Total futures market volume rose by 350 to 21,575 lots. Data showed total open interest fell 390 to 235,087 contracts in the previous session. (Reporting by Asha Sistla in Bengaluru; Editing by Lisa Shumaker)