NEW YORK, July 5 (Reuters) - Cotton futures finished lower
Tuesday on a fresh round of investor sales as the market failed
to derive any inspiration from a recovery in the commodity
complex after a holiday weekend, brokers said.

The market was shut Monday for U.S. Independence Day.
The key December cotton futures on ICE Futures U.S.
dropped 2.29 cents, or nearly 2.0 percent, to settle at $1.1552
per lb, dealing from $1.1502 to $1.1959.

Volume traded stood at 16,100 lots as of 2:41 p.m. EDT
(1841 GMT), about a fifth below the 30-day norm, Thomson
Reuters preliminary data showed.

Analysts said the December contract's Bollinger band, a
popular technical indicator for traders to determine a relative
definition of high and low prices, showed it is approaching the
lower end of that band and may go below it. Thomson Reuters
data showed the bottom of the range around $1.137.

(Graphic on December contract's Bollinger band:
http://graphics.thomsonreuters.com/gfx1/RP_20110507140734.jpg)

A fall in December below the bottom of that band could lead
to further losses in the market, said Mike Stevens, an
independent cotton analyst in Louisiana.

'We've been shooting technically for ($1.137),' he said,
adding the inability of cotton to follow the rest of the
commodity complex higher inspired further investor liquidation
during Tuesday's session.

Traders said the market is still monitoring conditions in
Texas and the discussion is now going to focus on how much of
the U.S. cotton crop would be harvested in the fall.

Despite the drought, the market's action is reflecting
concern that already high cotton prices are lowering demand for
the fiber.

'Difficult growing conditions in the U.S. and India are
being offset by weaker textile demand, however,' said a daily
commentary by brokers Flanagan Trading Corp in North Carolina.

On the weather front, more extreme heat is in store for the
U.S. Southwest and Texas through Saturday, forecaster Telvent
DTN said in a daily comment.

Open interest in the ICE futures cotton market stood at
140,014 lots as of July 1, the highest since June 21, ICE
Futures U.S. data showed. Volume traded on Friday stood at
8,395 lots, the smallest amount traded since May 23, it added.