* Mills make tentative purchases after recent drop
* Cotton on track to rise in Q3
* Prices down 17 percent year-to-date on surplus fears

NEW YORK, Sept 24 (Reuters) - U.S. cotton fell for a third
straight session on Monday hitting five-week lows as investors
continued to sell after the market's recent brush above 77
cents.
New York-traded cotton for December delivery settled
down 0.75 cent, or 1.02 percent, at 72.5 cents per lb on ICE
Futures U.S. It fell to 72.43 cents late in the session, its
lowest level since Aug. 16.
Tentative buying by textile mills after prices fell below
72.5 cents could help stem further losses, although sentiment
remains bearish, traders said.
"Cotton's drifting in the same range after it broke to the
downside. It's tested the bottom part of the range. Now it's
come down, there was evidence of mill buying," said Andy Ryan,
risk management consultant at INTL FCStone.
It was unclear where the buying came from, but most of the
interest came from mills in Asia, he said.
Cotton was also pressured by a weak euro, which fell against
the dollar after disappointing German data reignited concerns
that Europe's strongest economy is stalling.
A stronger dollar makes it more expensive for holders of
other currencies to buy dollar-denominated commodities.
Given its bleak outlook with global demand waning and output
rising, cotton underperformed the broader market on Monday. The
19-commodity Thomson Reuters-Jefferies CRB index was down
0.99 percent and U.S. stocks eased 0.22 percent.
The market has had higher spurts. It rose over 3 percent to
close to 78 cents on Sept. 14 after the U.S. Federal Reserve
pledged to buy an additional $40 billion of bonds a month - but
those rallies have been shortlived.
Concerns about the record global surplus expected by next
July have offset any hopes that efforts to boost the world's
largest economy will reignite retail sales and boost textile
demand.
Prices have fallen every week for the past month and are
down 17 percent for the year-to-date - close to bear territory.
Even so, the market is on track to have made gains in the
third quarter. The small rise, just under 2 percent, comes after
a 21-percent plunge in the second quarter. Friday is the last
trading day of the quarter.