Cotton declined to a three-month low on concern that demand may slow from China, the world’s largest buyer.

A cotton shortage in the year that ends on July 31 will be 24 percent smaller than forecast in March because of slowing demand, led by China, also the top producer, Birkenhead, England-based Cotlook Ltd. said last week.

“At the moment it looks as if demand has peaked,” said Thomas Mikulski, a senior strategist at Lind-Waldock, a broker in Chicago.

Cotton for July delivery dropped by the 6-cent exchange limit, or 3.6 percent, to settle at $1.6039 a pound at 2:47 p.m. on ICE Futures U.S. in New York. That’s the lowest since Jan. 25. The fiber has plunged 20 percent this month.

China’s cotton imports plummeted 15 percent in March from a year earlier, customs data showed last week.