July 23 (Reuters) -ICE cotton futures dropped more than 2% to a near four-year low on Tuesday, weighed down by a stronger U.S. dollar and favorable weather conditions that is expected to boost supplies in key growing areas.

* Cotton contracts for December CTZ4 fell 1.4 cents, or 1.98%, to 69.22 cents per lb at 11:56 a.m. EDT (1556 GMT), having declined to its lowest level since October 2020, earlier in the session.

* "It's been a very good growing season... I don't think there's any real weather problems other than a few hurricanes here and there and some wind damage that's come across the Midwest, but that wouldn't affect the cotton and it's just been a very good," said Jon Marcus, president of Lakefront Futures and Options brokerage in Chicago.

* In a weekly crop progress report on Monday, the USDA said 53% of the cotton crop was in good-to-excellent condition, compared with 45% a week ago.

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

* Oil prices fell for a third consecutive session on Tuesday, as growing expectations of a ceasefire in Gaza and demand concerns offset potential September interest-rate cuts and supply threats from Canadian wildfires. O/R

* Lower oil prices make cotton-substitute polyester less expensive.

* The harvest is shaping up to be excellent, said Marcus, adding "as for the time being, I don't see a bottom forming and I think now it's just pure price discovery on the way down."

* Elsewhere, corn and wheat eased as operators set North American weather risks against moderate demand and ample global supply. GRA/

Reporting by Anmol Choubey in Bengaluru; Editing by Shailesh Kuber