By Elizabeth Campbell

April 30 (Bloomberg) -- Cotton “busted” through a key price indicator yesterday, confirming that the rally to a two- year high is over, said Rogers Varner, the president of brokerage Varner Bros.

Yesterday, prices reached 83 cents a pound, the lowest level since April 20 when India’s textile commissioner said that registration of cotton export contracts were suspended as of the previous day. Futures dropped below resistance at 84.4 cents, the Maginot Line for the July contract, said Varner, referring to the defensive barrier France built to stop a German invasion in the 1930s.

“It looks like the market has done all it can do,” said Varner in a telephone interview from Cleveland, Mississippi. “The market is now cheaper than it was when the ban was announced, which implies that the news has been digested by the market.”

Cotton had tested that resistance line twice in the last six days, and Varner said the breakthrough will end the climb that sent prices to 87.1 cents on April 26, the highest level since March 6, 2008.

“If I was long, I’d sure be disappointed,” Varner said. “The only thing the bull can hold onto is the fact that July held the 20-day average.”

Yesterday cotton for July delivery fell 1.6 cents, or 1.9 percent, to 83.3 cents on ICE Futures U.S. in New York. The fiber has slipped 3.4 percent this week and jumped 56 percent in the past year.

India is the world’s largest cotton grower after China.