NEW YORK, April 19 (Reuters) - - U.S. cotton futures fell
sharply on Tuesday and held onto a steep loss into the finish,
with rollovers hitting May futures and ample supplies overseas
threatening later-date contracts.

But persistent dryness in the Southern United States
underpinned contracts dated beyond December.

'It appeared to be a day of liquidation as May is going
into deliveries. The July (contract) has been in trouble for
several days now, with continued technical weakness. December
was being dragged down in sympathy with the others,' said Mike
Stevens, an independent cotton analyst in Mandeville,
Louisiana.

The front-month May cotton contract on ICE Futures
U.S. slid 6.63 cents to close at $1.9010 per lb.

Most-active July slid the downside limit of 7.0
cents to finish at $1.7116 per lb. It fell from a session high
at $1.7910. New-crop December cotton's decline was a bit
more modest, closing down 1.90 cents at $1.2875 per lb.

As Southern Hemisphere crops are becoming available, large
crops are coming out of Australia, Argentina and Brazil.

July futures have been pressured by weak Chinese markets
and increased offerings on the electronic cash cotton market.

Plus, brokers said, Australian cotton has been offered
aggressively, and is now the cheapest in the world.

'Mills have extra cotton as the season comes to an end. So,
there is a lot on offer. Aggressive offers out of Australia are
pressuring cash markets both there and in China,' said
Stevens.

As a result, cotton prices in the United States have had to
come down to remain competitive.

Trading volume slipped to 28,1919 contracts, down from
31,871 lots traded on Monday, though about 6.7 percent above
the 30-day average, according to Thomson Reuters preliminary
data.

Weather worries have been offering some buffer to the
downside, especially in Texas, the largest cotton producer in
the United States.

Forecaster DTN Telvent said it expects mostly dry
conditions for the next five days, with temperatures near to
above normal, and that more rain was needed in cotton growing
regions.

Elsewhere, India forecast normal rains for the 2011
monsoon, strengthening prospects of a plentiful farm output
that could help bring relief to Asia's third-largest economy in
its battle with high prices.

Open interest in the cotton market fell to 182,494 lots
from 191,919 lots as of April 15, data from ICE Futures U.S.
showed.