July 17 (Reuters) -ICE cotton futures rose more than 1% on Wednesday, supported by a softer dollar, while upbeat sentiment in the oil and grains markets also seeped into the natural fiber.

* Cotton contracts for December CTZ4 rose 0.93 cents, or 1.3%, at 72.3 cents per lb at 11:27 a.m. EDT (1527 GMT).

* "The 10-day forecast for West Texas looks mostly hot and dry, and so that is significant, plus the dollar is down sharply, and that's friendly for cotton," said Rogers Varner, president of Varner Brokerage in Cleveland.

* The U.S. dollar index .DXY fell 0.5% to hit its lowest level since March 21, making cotton less expensive for overseas buyers.

* Supporting the natural fiber, Chicago wheat rose to recover from a four-month low while soybean and corn futures edged up for a second day to move away from recent multi-year lows. GRA/

* Oil prices rose more than 1%, making cotton-substitute polyester more expensive. O/R

* "You got hurricane season right in front of you and the weather for West Texas does not look very good. It's been good up until about July 4, but it doesn't look promising from here forward," Varner said.

* Investors are also watching out for the weekly export sales report from the U.S. Department of Agriculture (USDA), due on Thursday, for more cues on demand.

* 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

Reporting by Anmol Choubey in Bengaluru; Editing by Tasim Zahid