* Trade eyes USDA crop report Thursday
* Industry group NCC hands out planting survey Friday
* Fund roll puts pressure on cotton

NEW YORK, Feb 7 (Reuters) - Cotton futures settled
sharply lower Tuesday, mainly due to spread trade as investment
funds began moving their positions in the market out of the spot
month and into the back contracts, analysts said.
Benchmark March cotton on ICE Futures U.S. declined
1.74 cents, or almost 2 percent, to finish at 94.57 cents per
lb, dealing from 94.35 to 96.93 cents.
"It sort of stalled out," said Mike Stevens, an independent
cotton analyst in Louisiana.
The roll by investment funds has begun and will pick up in
earnest the rest of the week, a process which tends to "put the
maximum pressure on the market," Stevens said.
Traders said cotton market players were tweaking positions
before release of the U.S. Agriculture Department's monthly
supply/demand report on Thursday at 8:30 a.m. EST (1330 GMT).
They said market participants will be looking for possible
reductions in the estimate for U.S. 2011/12 cotton production,
which the government pegged in last month's report at 15.67
million (480-lb) bales.
Other possible changes could also include adjustments for
world consumption.
The trade is also looking forward to an annual survey by the
National Cotton Council on potential U.S. cotton plantings this
year which is due out on Friday.
A Thomson Reuters survey showed American farmers are
expected to reduce 2012 cotton plantings by some 10 percent to
nearly 12 percent, to around 13.002 million-13.242 million
hectares.
(Factbox on U.S. cotton plantings in 1998 to 2011)
Open interest in cotton , an indicator of investor exposure
in the market, rose to 187,629 lots as of Feb. 6, ICE Futures
U.S. data showed.
Volume traded on Monday stood at over 24,400 lots, more than
two-thirds above the 30-day average, according to preliminary
Thomson Reuters data.