Speculators and funds reported bailing out of recently established longs. December had surged 938 points or 11% from the Aug. 1 low to FridayΆs high.

Cotton futures plunged as much as the 400-point daily limit Tuesday, triggering sell stops on the way down as speculators and funds were seen bailing out of recently established longs.

Benchmark December hit limit down at 88.86 cents around 10:35 a.m. CDT and remained there the remainder of the session. Thinly traded October also closed limit down at 88.76 cents and March shed 372 points to close at 86.28 cents.

Volume climbed to an to an estimated 25,100 lots from 15,620 lots the previous session when spreads totaled 4,051 lots or 26%, EFS 1,308 lots and EFP 33 lots. Options volume totaled 4,104 calls and 9,047 puts.

The market ran out of buying impetus on Monday after leaping 938 points or 11.1% from the Aug. 1 low to FridayΆs high, basis December. Spec buying erupted Aug. 7 when December broke out of a tightened two-month-old triangular formation.

Prices continued to power rapidly ahead when USDA projected in its first survey-based production estimate of the season on Aug. 12 a U.S. all-cotton crop of 13.1 million bales, below the low end of most private forecasts and down nearly 4.3 million bales from last seasonΆs output.

During the previous 20 years, upland production — forecast at 12.5 million bales for 2013-14, down 25% from last season — was above the final tally 11 times and below it nine times.

Past differences between the August forecast and the final upland production estimate indicate that chances are two out of three for the 2013 crop to range between 11.3 million and 13.6 million bales.

The market had experienced little correction following the USDA crop and supply-demand estimates and mill demand had disappeared above 90 cents as prices rationed the tight available supply. Fresh sales to China by U.S. yarn mills were curtailed.

Talk, though not new, that China may announce plans next month to sell more cotton from its huge national reserves also may have weighed on market sentiment, as did the rapid buildup of spec and fund longs.

The various weekly traders-commitments reports from the Commodity Futures Trading Commission showed the speculative community as of Aug. 13 had built the largest net longs in about three years in most instances, an analyst observed.

Futures open interest expanded 1,640 lots Monday to 214,378, with DecemberΆs up 498 lots to 170,893 and MarchΆs up 893 lots to 32,398. The board total was the largest since November 2010, up more than 22% from the open interest going into the Aug. 7 session.

Certificated stocks fell 1,623 bales to 41,218, smallest since November 2012, with still none awaiting review.

World values as measured by the Cotlook A Index dipped 20 points Tuesday morning to 97.15 cents. The premium to MondayΆs December futures settlement widened 26 points to 4.29 cents.