Buying ebbed slightly after prices rose earlier in the day to 76.05 cents. Volume slumped sharply though, with less than 7,000 contracts in March changing hands on the day. That was some 65 percent less than its 30-day average. With no sign of the dry spell ending in Texas, the country's largest producing state, some speculative investors have been buying, betting on further damage to the state's crop in the 2012/13 marketing season.
"I think this might be reawakening the drought bulls. I don't know why it won't go down," the broker said. Last week, the US government cut its output estimate for Texas for the current season in its latest monthly report.
Wednesday's drop was in line with the weaker grains market that has sustained heavy losses in recent weeks. In contrast to cotton's recent fortunes, corn futures hit their lowest level in more than five months on Wednesday after an influential forecaster predicted that farmers will plant their largest acreage since 1936. After this year's meteoric price rally due to the drought, most market participants expect growers to sow much less cotton to take advantage of higher-priced wheat and corn. Analysts and brokers have said cotton prices may benefit from the smaller acreage planted next year, although most say it will take more than one year of fewer plantings to eat into the record global surplus expected in the 2012/13 marketing year.