NEW YORK (TheStreet) -- Cotton has plunged into the red Wednesday as worries about weak physical demand crept back.

Cotton for July delivery was losing 3.8% to $1.5151 a pound, sinking to the bottom of the morning's biggest commodity laggards.

"Physical demand is still sporadic to weak across Asia," said INTL/FCStone Fibers and Textiles Senior Risk Management Consultant Andy Ryan.

"In China, rising yarn inventory levels, worries over further monetary tightening and new forecasts of a looser domestic balance sheet all added to the bearish sentiment in local spot and forward markets, causing both to retreat further overnight."

China's largest textile mill lowered cotton procurement prices overnight, while inland average quotes sank 39 to 109 yuan -- the lowest in months, Ryan added.

The analyst said open interest on cotton contracts on the Intercontinental Exchange stumbled to its lowest since Oct. 2009.

"New crop contracting is slow," he noted.

Heavy cotton users such as apparel and accessories companies were trading mixed.Coach(COH_) was falling 0.3% to $58.99, Polo Ralph Lauren(RL_) was trading sideways at $127.87, V.F. Corporation(VFC_) was down 0.7% to $98.28 and The Gap(GPS_) was up 0.8% at $23.31.