July 16 (Reuters) -ICE cotton futures fell on Tuesday, pulled down by a moderately stronger U.S. dollar and a bearish sentiment in the oil market.

* Cotton contracts for December CTZ4 fell 0.94 cent, or 1.31%, to 71.50 cents per lb at 12:03 p.m. EDT (1603 GMT).

* "The crop condition ratings really did not change from (last week)... that's probably a little negative because I think people are looking for a little bit of improvement. Also, we had a pretty good rally yesterday and I think we're seeing some turnaround Tuesday trading because of that," said Jack Scoville, vice president at Chicago-based Price Futures Group.

* In a weekly crop progress report on Monday, the USDA said 45% of the cotton crop was in good-to-excellent condition, in line with last week's report.US/COT

* The U.S. dollar index .DXY rose 0.2% making cotton more expensive for overseas buyers.

* Oil prices declined more than 1% on Tuesday, making cotton-substitute polyester less expensive. O/R

* In terms of the near-term outlook for cotton prices, "we could rise to 74 to 75 cents...the price action yesterday suggested that 70 cents is probably about as cheap as we need to be right now."

* Cotton prices hit an almost two-week high in the previous session as traders amplified their net short positions following last week's low cotton trade.

* Elsewhere, Chicago wheat futures steadied after a slide to a four-month low as the return of major importers Egypt and Algeria helped to stem supply pressure from northern hemisphere harvests. GRA/

* Cotton speculators increased their net short position by 6,378 contracts to 45,122 in the week to July 9.

Reporting by Anmol Choubey in Bengaluru; Editing by Shreya Biswas