NEW YORK: Cotton futures finished lower Monday on speculative sales sparked by news that world No. 2 producer India was resuming cotton exports and that the key growing area of Texas was drenched by rain overnight, analysts said.

July cotton on the ICE Futures US exchange dropped 1.83 cents, or 2 percent, to settle at 89.40 cents per lb, trading from 87.87 to 91.65 cents.

For the month, the second-position cotton contract declined 4.40 percent.

New-crop December fell 0.94 cent, or 1 percent, to end at 86.96 cents after ranging from 85.40 to 88.35 cents.

"It's a combination of India lifting the export ban. That psychologically cooled (the market)," said independent analyst Mike Stevens in Louisiana.

India has allowed cotton exports without any restrictions and traders feel this would further bloat supplies and put enormous pressure on the old-crop July contract.

Rain in Texas, the top cotton state, also weighed on futures, Stevens said.

The rains boosted soil moisture during the peak spring planting season there which normally runs from May 5 to 20, analysts said.

But Stevens and other analysts said key July continued to trade in a band between 87 and 94 cents, a range the most-active contract in the cotton market has maintained since the start of March, Thomson Reuters data showed.

The market will be turning its attention to the US Agriculture Department's monthly supply/demand report to be released next week. That report will show the first estimate of market conditions in the coming 2012/13 marketing season (August/July).

Monday's estimated volume was almost 25,300 lots, about 5 percent over the 30-day norm, according to Thomson Reuters data.

Open interest stood at 182,482 lots as of April 27, ICE Futures US exchange data showed.