* Selling may drag market back toward 70-ct level
* Chinese cotton sales, weak manufacturing data weighs
NEW YORK, Sept 5 (Reuters) – Cotton futures fell for a second-straight day on Wednesday, pressured by poor fundamental demand prospects and a weaker technical picture that may work to values down toward the 70-cent level.
Limited damage from Hurricane Isaac to crops in Mississippi and Louisiana, key U.S. cotton states, left the market vulnerable after rallying last week to 77.49 cents per lb, its priciest level in three months.
“It left it technically vulnerable because we couldn’t reach that high. All we did was establish the high-end of the trading range,” said Mike Stevens, an independent cotton analyst based in Mandeville, Louisiana.
News over the weekend of Chinese cotton sales and weaker manufacturing data in China and the United States only added to this week’s negative reversal.
“The market had nothing bullish to feed itself on so if cotton can’t go up, it’s going to try and come back down,” Stevens said.
The benchmark December cotton contract shed 0.33 cent to settle at 75.35 cents per lb, after moving between 74.80 and 76.00 cents.
“Obviously, it is still an oversold market so the correction this month is not expected to be a deal breaker for a larger rally effort. Our expectation is for the market to stay above 71.00 on this next dip,” Knight Futures analysts said in a research note on Tuesday.
ICE cotton futures volumes stood above 15,000 lots in late New York business, nearly 40 percent below the 30-day norm, according to preliminary Thomson Reuters data.
The U.S. Agriculture Department’s weekly crop progress report showed 42 percent of U.S. cotton was “good” or “excellent”, down 1 percentage point from the previous week, but considerably better than the 28 percent in 2011.
(Editing by Bob Burgdorfer)