* Market torn by Indian policy clash on exports
* Sellers withdraw offers of cotton in cash market
* Trade awaits USDA crop report on Friday

NEW YORK, March 6 (Reuters) - Cotton futures ended
lower on Tuesday as investors were prompted by a firm dollar and
weak outside markets to take profits from the previous session's
spike, even as uncertainty about a cotton export ban by India
minimized losses, analysts said.
The benchmark May cotton contract on ICE Futures U.S.
fell 0.81 cent to settle at 91.42 cents per lb, having traded
between 90.77 and 94.24 cents.
On Monday, the benchmark fiber contract jumped its 4-cent
daily limit to close at 92.23 cents per lb, its biggest one day
move in a month.
Tuesday's volume of around 32,000 lots was about 10 percent
below its 30-day norm, Thomson Reuters preliminary data showed.
"The jury on this rally is out and no one knows what lies
ahead," said Mike Stevens, an independent cotton analyst in
Louisiana.
The cotton market was thrown into confusion after India's
farm minister said Tuesday he would challenge an import ban
announced a day earlier by another government agency.
The ban rallied global cotton markets by raising fears that
mills in China, the world's largest consumer, would turn to the
United States at a time when its own supplies of cotton are
almost sold out.
The Indian ban caught investors leaning the wrong way and
came on the heels of data from the U.S. Commodity Futures
Trading Commission showing that speculators had switched to a
net short position in cotton for the first time in a year.

Most of India's cotton exports are shipped to its northern
neighbor China. India is the world's second biggest producer of
cotton, but exports a significant amount of that to its Asian
rival where it enjoys a competitive advantage in shorter
shipping routes compared to cotton coming from the United
States.
India is the top rival of the U.S., the world's No. 3
producer of cotton and the top exporter of the fiber.
Cash brokers said they are now hearing of some offers to
sell cotton being withdrawn to apparently wait out what happens
in India.
That was reminiscent of cotton's historic rally in 2011 when
prices hit a peak of $2.27 a lb in March.