NY cotton jumps above 76 cents ahead of USDA report

* USDA expected to lower world-ending stock forecast

* Low global demand could offset cuts in Indian output - analysts

NEW YORK, Aug 8 (Reuters) - Cotton futures jumped above 76 cents per lb for the first time since mid-May on Wednesday ahead of a key U.S. government crop report that may forecast lower output from India, the world's second-largest producer, due to the weak and delayed monsoon.

The benchmark December cotton contract on ICE Futures U.S. rose 0.80 percent to settle at 76 cents per lb, just 0.30 cent shy of its intraday high.

Brokers and analysts expect the U.S. Department of Agriculture to lower its world-ending stock estimate by about 2 million bales from 72 million when it publishes its first crop report for the 2012/13 season on Friday.

"This is positioning ahead of the market report and expectations that there might be some bullish figures. If the USDA doesn't deliver, I think we could see the market erode all the gains of the last week," said Rabobank cotton analyst Keith Flury, who pegged world-ending stocks at 67 million bales.

Morgan Stanley grains analyst Hussein Allidina cautioned against expecting too big a cut in the USDA's Indian forecast too. His 24-million bale estimate is in line with the government.

"We see limited further downside to Indian production estimates at the current time, as these figures already bake in relatively robust assumptions on the impact of the weak monsoon," he said.

Any disruptions to harvesting will not be enough to eat into the global surplus either, particularly given that the 2011/12 season which just expired ended with the largest end-stocks on record. Almost half are held in China's strategic reserve.

It is not just an issue of supply. Demand remains slow due to weak global economic conditions and demand destruction as textile mills use more manmade fibers after the tumultuous prices of the past years, traders said.

"I'm not sure they (the USDA) can wow the market," said Keith Brown, president of commodity firm Keith Brown and Co in Moultrie, Georgia.

Grains were also stronger on Wednesday ahead of the report, which is expected to reveal the lowest U.S. corn yield in 15 years, a marked turnaround from the conditions predicted before the drought hit the Corn Belt in June.

(Reporting by Josephine Mason; editing by Jim Marshall)

Source: http://in.reuters.com/article/2012/08/08/markets-cotton-idINL2E8J8DDH20120808