* Market interpretation of USDA crop report mixed
* Weak stocks, grains put pressure on cotton

NEW YORK, April 10 (Reuters) - Cotton futures settled mixed
on Tuesday as investors sifted through a U.S. government crop
report for clear signals, while the weak tone of both the grains
and stock markets pressured back months, dealers said.
The benchmark May cotton contract on the ICE Futures
U.S. exchange rose 0.25 cent to finish at 89.73 cents per lb,
dealing from 89.34 to 90.90 cents. The rest of the board traded
lower.
Tuesday's estimated volume reached almost 53,600 lots, which
would be the highest since Nov. 15, 2011 when it hit 57,321
lots, ICE Futures U.S. and Thomson Reuters data showed.
The U.S. Agriculture Department's monthly supply/demand
report predicted world cotton stocks at the end of the 2011/12
marketing year on July 31 will stand at 66.07 million (480-lb)
bales, up from 50.51 million bales in 2010/11, the biggest
yearly rise in over 25 years.
While the figure looked bearish on the surface, the USDA
data showed that India and China hold nearly half of the stocks,
and cotton sitting in their warehouses would never be released
to the market, analysts said.
"There is an element of disbelief" about the USDA report,
said Keith Brown, president of commodity firm Keith Brown and
Co. in Moultrie, Georgia.
The spot contract stayed in positive territory for most of
the session while the back months trended lower.
Weighing on the cotton market was a weak grains complex that
saw corn prices fall by 2 percent. Another negative was
the slide in world stock prices on worries about slowing U.S.
job growth.
Traders said the market was waiting to examine the USDA's
weekly export sales report on Thursday to gauge demand for U.S.
cotton.
Open interest stood at 189,612 lots as of April 9, down from
the 193,427 lots as of April 5, which was the largest number of
open cotton futures contracts since Feb. 15, 2011, ICE Futures
U.S. exchange data showed.