NEW YORK, May 11 (Reuters) - U.S. cotton futures reeled from investor
sales to finish lower Wednesday as another round of liquidation hit the
commodities sector, analysts said.

The key July cotton contract on ICE Futures U.S. dropped 1.10
cents to settle at $1.503 per lb, dealing from $1.4776 to $1.5512.
The new-crop December cotton futures shed 0.73 cent to close at
$1.2519 cents.

Volume traded stood at around 17,600 lots, about a quarter below the
30-day norm, Thomson Reuters preliminary data showed.

'The spillover from crude, silver and gold and the sharply higher
dollar hit cotton,' said Keith Brown, president of commodity firm Keith
Brown and Co in Moultrie, Georgia.

For the second week in a row, a flurry of liquidation sell orders
battered the commodity sector and put fiber contracts under pressure.

Those losses were pared by sustained trade and possible mill buying,
dealers said.

The U.S. Agriculture Department's monthly supply/demand report elicited
almost no reaction in the market.

Brown said the USDA's forecast of a rise in world cotton ending stocks
in the 2011/12 marketing year (August/July) to 47.93 million (480-lb) bales
from 42.52 million bales in 2010/11 was a 'little negative' for futures.

But the impact of the number was muted by the fact it is a projection
and that can easily change as the next season kicks off, analysts said.

The market will be turning its attention to the USDA's weekly export
sales report to see if any more cotton sales are cancelled, as has happened
in the last few USDA reports.

The level of investor interest in the cotton market appears to be
gradually recovering. Open interest in the cotton market rose to 150,102
lots as of May 10, from the prior rally of 148,600 lots, data from the ICE
Futures U.S. showed.

Open interest stood at 147,578 lots on May 6 which is the lowest level
since October 2009, ICE Futures U.S. said.

Volume came to 19,551 lots as of May 10 versus the previous tally of
12,006 lots, exchange data showed.