ICE cotton eases; heads for weekly loss amid China demand worry

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* Prices fall for 4th straight session

* U.S. weekly sales fall, in line with expectations

* July/December spread still narrowing from June 2011 highs

NEW YORK, April 3 (Reuters) – Cotton futures fell for a fourth straight day on Thursday, the longest retreat since late January, as worries mounted over waning demand in top consumer China and over increasing supplies in the United States, the world’s top exporter.

The most-active May cotton contract on ICE Futures U.S. edged down 0.53 cent, or 0.6 percent, to settle at 90.98 cents a lb.

The front-month contract was poised for its first weekly loss in five weeks.

U.S. weekly export sales and shipments were both down from the previous reporting week, though they were seen as relatively strong in the face of a runup that shot the benchmark contract to a two-year high of 97.35 cents a lb last week.

Net sales of 2013/14 cotton during the week ended March 27 were 42,700 bales and shipments totaled 246,700 bales, a U.S. Agriculture Department (USDA) report showed.

“The export sales were decent, but there’s no overwhelming reason to buy it here. Cotton is starting to roll over,” said Jack Scoville, a vice president at Price Futures Group in Chicago.

The first auction of state reserves in China since the government cut prices met strong demand this week, reinforcing worries over lower demand for foreign fiber in the world’s top textile market.

Beijing launched a stockpiling program in 2011, driving voracious import demand and putting a floor under the world market.

China is expected to overhaul the program this year, crimping demand for imports amid expectations of higher U.S. output.

The USDA earlier this week forecast U.S. farmers would boost cotton acres this season, widely expected after cotton prices rallied in 2013.

Spreading added pressure, as traders rolled positions forward.

The premium of the July contract, which represents the current crop, against the December contract, which represents the new crop, fell for a fourth straight session to 11.81 cents a lb.

It hit 13.68 cents a lb on Friday, the highest such premium since June 2011, and seen as evidence of tight nearby supplies. (Reporting by Chris Prentice; Editing by Peter Galloway)

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