NEW YORK, Dec 29 (Reuters) - U.S. cotton futures finished lower
Wednesday for the second straight session on investor liquidation although
the market managed to hold the lower end of its trading range, analysts
said.

The key March cotton contract on ICE Futures U.S. declined 3.93
cents or 2.72 percent to finish at $1.4043 per lb, moving from $1.4038 to
$1.4635.

Volume was seen around 12,800 lots, about 50 percent below the 30-day
norm, Thomson Reuters preliminary data showed.

The cotton market is one of the best performing commodities in the
Reuters-Jefferies commodity index, up almost 75 percent year to date as the
market rallied to hit levels that have not been seen since the U.S. Civil
War in the 19th century.

(Graph: http://link.reuters.com/kew48n)

'We're trying to break out on the downside,' said Mike Stevens, an
independent cotton analyst in Mandeville, Louisiana. 'It's (the cotton
market) is trying to confirm the direction is down.'

Traders said many investors have fled their desks and will not be back
until after the New Year. Those who remain are content to maintain or
defend outstanding positions in cotton futures.

Cotton prices in China were slightly softer, with May futures
on the Zhengzhou Commodity Exchange last traded at 27,645 yuan per tonne,
down 100 yuan on the day.

Analysts said the market will be looking toward the U.S. Agriculture
Department's weekly export sales report due out on Thursday to gauge how
much demand there is going forward for U.S. cotton.

Cotton brokers expect total U.S. cotton sales to range from 150,000 to
250,000 running bales (RBs, 500-lbs each) as business thinned out due to
the Christmas holidays. Last week, total U.S. cotton sales stood at 405,400
RBs.