Cotton fell to a one-month low, dropping the exchange limit, as China said it will clamp down on the use of bank credit for speculation in agricultural markets and as the dollar gained.

China, the biggest consumer of the fiber, will make it tougher to use loans to hoard products or to artificially inflate prices of agricultural goods, the China Banking Regulatory Commission said yesterday on its website. The dollar rose against most of its major counterparts after North Korea and South Korea exchanged artillery fire, encouraging demand for the greenback as a refuge.

“China is making efforts to control prices,” said Sid Love, the president of Joe Kropf & Sid Love Consulting Services LLC in Overland Park, Kansas. “Also, the dollar strengthening, because of Korea, is putting pressure on most commodities.”

Cotton for March delivery declined the exchange limit of 6 cents, or 5.1 percent, to settle at $1.1179 a pound at 2:44 p.m. on ICE Futures U.S. in New York, the lowest price since Oct. 20. The contract has plunged the maximum allowed five times in less than two weeks and is down 26 percent since touching a record $1.5195 on Nov. 10.

The Thomson Reuters/Jefferies CRB Index of 19 raw materials declined as much as 1.4 percent, led by copper and cotton.

Last week, China increased bank-reserve requirements following the fastest rise in consumer prices in two years, and Premier Wen Jiabao called for a crackdown on speculation in agricultural goods, saying price controls may be needed on “daily necessities.” Cotton dropped 8.2 percent last week.

On China’s Zhengzhou Commodity Exchange, cotton futures for May delivery fell as much as 5 percent today, declining for the second-straight session.

Cotton in New York still is up 48 percent this year amid surging demand from China and plunging inventories in the U.S., the leading exporter.