Cotton futures were down for a fourth day on Thursday, slumping to a seven-day low after the International Cotton Advisory Committee warned of slowing global cotton demand and forecast a significant drop in prices.
On the ICE Futures U.S. Exchange, cotton futures for December delivery traded at USD0.9780 a pound during early U.S. morning trade, dropping 0.55%.
It earlier fell by as much as 0.74% to trade at USD0.9761 a pound, the lowest price since October 25.
The International Cotton Advisory Committee said that global cotton demand in the 2011-12 marketing season was forecast to total 24.6 million tonnes, almost unchanged from 24.7 million in the previous marketing year.
China, India and Pakistan, which together account for nearly two-thirds of global demand, will show almost no growth in consumption, according to the ICAC.
"The projected slowdown in global economic growth in 2011 and 2012 will affect consumption of textile products, and therefore demand for cotton fiber," the committee said.
While demand is expected to weaken, global production of the fiber was forecast to increase to 26.9 million tons in the 2012-12 season, up 8% from the previous marketing season as higher prices earlier in the year prompted farmers to plant more cotton crops.
Production is expected to increase significantly in Pakistan, Australia, and Turkey. However, U.S. production is forecast down by 12%, due to severe drought in the Southwest.
The ICAC raised its estimate for the world cotton surplus in 2011-12 to 2.3 million tonnes, up from a previous projection of a 1.9 million tonnes surplus.
'This increase could translate into a significant decline in prices", the ICAC said.
Cotton prices have lost nearly 6.5% since hitting a six-week high of USD1.0434 a pound on October 28.
Meanwhile, commodity traders continued to eye development out of the euro zone, as the European Central Bank unexpectedly cut its key interest rate, while speculation mounted that Greek Prime Minister George Papandreou will resign later in the day.
Elsewhere, on the ICE Futures Exchange, coffee futures for December delivery jumped 1.34% to trade at USD 2.2688 a pound, while sugar futures for March delivery eased down 0.05% to trade at USD0.2556 a pound.