Key December cotton sank 1.69 cents to settle at 49.08 cents a lb, trading from 48.90 to 51.10 cents. March shed 1.41 cents to 50.54 cents and the rest slumped 1.15 to 1.84 cents.
"I think we're seeing more of a correction in cotton," said Keith Brown, president of commodity company Keith Brown and Co in Moultrie, Georgia.
Cotton futures had banked on aggressive speculative to rise to its highest level in two months, but analysts said the inability of benchmark December to race past 52 cents induced those who bought futures to dump fibre contracts, dealers said.
Brown and other analysts said the December contract may have to pull back to around 46 or 47 cents and then turn its attention to market fundamentals in the 2004/05 marketing year (August/July).
"We need to do some backing and filling, then we start aiming for the September (US Department of Agriculture) supply/demand report," one trader said.
Separately, the market paid little heed to the weekly USDA export sales report which showed net US upland cotton sales for the week ending August 19 reaching 115,600 running bales (RBs, 500-lbs each), versus trade expectations it would range from 50,000 to 150,000 RBs.
The monthly US Census Bureau cotton consumption data stood at 6.37 million (480-lb) bales. In its August supply/demand report, USDA pegged annualised US cotton use at 5.9 million bales.
"The market just did not look at the numbers. It was focused on something else," a dealer explained.
Brokers Flanagan Trading Corp said support in the December contract lies at 48.50 cents with resistance at 49.20 and 50 cents.
Floor dealers said estimated final volume stood at 11,000 contracts, up from Wednesday's tally of 6,870 lots. Open interest rose 647 lots to 71,123 lots as of August 25.