(Reuters) - Cotton futures fell below 90 cents per lb for the first time in three weeks on Friday, breaking a key support level and notching up its biggest weekly loss in over a month, as speculative investors continued to liquidate bullish bets.

Sell stops were also triggered after piercing the 90-cent mark, with weak import data from China, the world's biggest textile market, reinforcing concerns about waning demand as Beijing overhauls its stockpiling policy.

The most-active July cotton contract on ICE Futures U.S. closed down 0.6 percent at 89.82 cents a lb. Prices had been above 90 cents since April 23.

Halfway through the month, prices were on track for their first monthly low since October last year.

Speculative investors have pulled more bullish bets from the fiber market, Friday's data showed, reversing a months-long inflow of cash as speculators bet on tightening supplies.

Any further long liquidation may be cushioned by trade short covering, traders said.

"There should be plenty of trade shorts waiting in the wings, ready to absorb anything the specs throw at them," Peter Egli, director of risk management for British merchant Plexus Cotton Ltd, said in a report.

"We may therefore see some choppy trading action in the days ahead."

With twice as many trade shorts as there are spec longs, he said he expects the market to hold any selloff in the 87-89 cents range. (Reporting by Josephine Mason; Editing by James Dalgleish )