Sept 12 (Reuters) -ICE cotton futures reversed course to gain after a federal monthly supply-demand report forecast lower domestic and global production of the natural fiber for the 2023-24 crop year.

ICE cotton contracts for December CTZ3 rose 0.52 cents, or 0.6%, to 88.3 cents per lb by 12:26 p.m EDT (1726 GMT).

"What makes it (WASDE) friendly is that they cut the U.S. crop... certainly the stage is set for the market to move higher," said Keith Brown, principal at cotton broker Keith Brown and Co, in Georgia.

The U.S. Department of Agriculture (USDA), in its September World Agricultural Supply and Demand Estimates (WASDE) report, projected higher beginning stocks, but a 860,000 bales decrease in U.S. production.

"Projected consumption is unchanged from August, but exports are down 200,000 bales and ending stocks are 100,000 bales lower," the report said.

Global production was projected to be 1.7 million bales lower for 2023-24, while global consumption was also seen more than 1 million bales lower, with reductions in India, Bangladesh, Mexico and Vietnam, the report added.

Louis Rose of Tennessee-based Rose Commodity Group said in a note that while Texas production was currently estimated at 3.104 million bales versus 3.1 million last season, there was still room for a further reduction in projections.

The "bullish" report should help December cotton push through technical resistance at the 90-cents level, Rose added.

Analysts have flagged concerns over the possible impact to the cotton crop from hot weather in key growing areas, especially Texas.

The USDA in a separate weekly crop progress report, said 29% of the crop was in good to excellent condition, down from 31% last week.

Elsewhere, Australian cotton was being stockpiled in Chinese warehouses on expectations that a three-year ban on imports will soon be lifted as ties between Beijing and Canberra ease.

Reporting by Rahul Paswan and Sherin Elizabeth Varghese in Bengaluru; Editing by Sharon Singleton and Shailesh Kuber