NEW YORK, April 13 (Reuters) - U.S. cotton futures settled
lower for a second day in a row on Wednesday as funds and
merchants sold amid weaker textile demand and price pressure
from new-crop sales in the Southern Hemisphere, analysts said.

The key May cotton contract on ICE Futures U.S. shed
2.38 cents to settle at $1.9735 per lb, trading from $1.967 to
$2.0673.

Second-position July sustained the biggest losses on
the board by dropping 4.93 cents to close at $1.8064 per lb.

The new-crop December cotton contract declined 0.86 cent
to finish at $1.347.

Total trading volume was around 42,200 lots, almost
two-thirds above the 30-day norm, Thomson Reuters preliminary
data showed.

'That's what July is reflecting, the softening of demand
(in the market),' said Mike Stevens, an independent cotton
analyst in Louisiana who added that high cotton prices are
forcing a 'rationing' of demand from fiber consumers.

Traders said the second-position July cotton contract has
come under pressure as producers in major Southern Hemisphere
growers Australia, Brazil and Argentina market their cotton.

The new-crop December cotton contract, on the other hand,
stumbled on expectations that U.S. 2011 cotton plantings will
likely exceed the government estimate of 12.566 million acres.

Monsanto's director of marketing for agriculture in the
southern United States, David Rhylander, predicted that the
U.S. Agriculture Department survey of U.S. cotton sowings
should increase given high cotton prices.

Monsanto is one of the biggest sellers of cotton
seed in the world.

Open interest in the cotton market stood at 198,223 lots as
of April 12, just shy of the two-month peak at 200,051 lots hit
last week, data from ICE Futures U.S. showed.

Traders said the market will be looking toward the USDA's
weekly export sales report. They expect total U.S. cotton sales
will reach around 250,000 to 325,000 running bales (RBs,
500-lbs each).