* Prices break out of recent ranges
* Market cautious ahead of Fed policy meeting results
NEW YORK, Sept 12 (Reuters) – U.S. cotton futures fell for a third day on Wednesday almost hitting one-month lows after the U.S. government raised its estimate for global stockpiles in 2012/13 to a new record.
That estimate reinforced concerns about waning demand in China, the world’s largest textile market.
The benchmark December contract settled down 2 percent at 73.33 cents per lb, breaking out of a recent narrow trading range and sinking through its 50-day moving average.
Prices had been as low as 72.75 cents, its weakest since Aug. 17. Trading was busy with over 29,000 lots changing hands, almost 40 percent higher than the 250-day average.
In its monthly crop report on Wednesday, the Agriculture Department (USDA) increased its estimate for the global cotton surplus to a record of 76.5 million 480-pound bales due in part to a drop in consumption and imports by China.
The new forecast represents a nearly two-million bale increase from last month’s estimate, which was already at an all-time high since USDA records began in 1960.
A large carryover from last season was also a factor.
Traders have worried about the size of the excess material washing around the market for some time. A sluggish global economy and drop in use by some mills who prefer to use lower-priced and less volatile synthetic materials have hurt demand.
But the second rise in a row alarmed many who expected the government to hold pat.
“It was a shock. Nobody anticipated the world carryover would be increased to 76.5 million bales. That speaks volumes in itself and it’s extremely bearish in the front month,” said Lou Barbera, cotton analyst at ICAP Cotton in New York.
A cut to U.S. output due to poor weather in Texas and Mississippi could not offset the bearish tone that pervaded the market.
Adding further pressure, some dealers scaled back bullish bets ahead of the U.S. Federal Reserve policy decision due on Thursday. Most anticipate chairman Ben Bernanke will announce a third round of quantitative easing in a bid to boost the world’s largest economy.
The fiber contract underperformed a broadly positive commodity market and an equity market that was held in check ahead of the Fed meeting.
The Thomson Reuters-Jefferies CRB index of 19 commodities rose 0.25 percent. (Reporting by Josephine Mason. Editing by Andre Grenon)