After gyrating wildly and losing 2 percent last month, cotton futures have posted a new 13-week low amid ongoing uncertainty about demand from China and weak technical considerations.

Benchmark December lost 94 points for the week ended Thursday to close at 82.30 cents, its lowest finish since May 31. December printed its lowest intraday price (82.11) since the June 3 low of 81.72, now an important support area which matches a seven-month low. October fell 120 points to 82.40 cents and March dipped 42 points to 81.89 cents.

Speculative long liquidation continued as open interest fell 11 sessions in a row coming into ThursdayΆs trading, down 41,106 lots to 172,272, with DecemberΆs down 46,034 lots to 124,36l.

Dollar index strength on positive economic data contributed to driving the cotton market lower. December has plunged 1,102 points or nearly 12 percent from the rally high settlement on Aug. 16.

Cash sales on the grower-to-business exchange rose during the holiday-shortened trading week to 2,120 bales from 476 bales the previous week. Prices averaged 79.11 cents, up from 78.67 cents, reflecting an increase to 26.03 cents from 24.20 cents in premiums over loan repayment rates. Daily price averages ranged from 78.11 to 80 cents.

The basis on the base quality in East Texas-Oklahoma narrowed 161 points to 190 points off October.

Traders looked ahead to updated U.S. and world supply-demand estimates and a new domestic production forecast from USDA on Thursday. Last monthΆs report showing a larger-than-expected reduction in U.S. crop prospects, a drop in world production and marginally lower global ending stocks triggered a massive speculative-driven rally.

U.S. crop ratings fell during the week ended Sept. 1 after improving two weeks in a row, with good to excellent cotton down two percentage points to 45 percent and poor to very poor up three points to 23 percent.

The DTN cotton condition index slipped to 99 from 107 a week earlier but was up from 86 a year ago.

Conditions declined in Texas where good-excellent cotton dipped a point to 34 percent and poor-very poor increased four points to 33 percent. The Texas harvest edged up two points to 6 percent completed, behind 10 percent on average.

Boll opening nationally at 16 percent trailed the average of 29 percent, while cotton setting bolls at 95 percent narrowed the lag to a point behind the five-year average.

Earlier, a preliminary Farm Service Agency report on acres certified by producers confirmed that 3,695,087 acres were planted on the Texas High Plains, in line with the 3.7 million estimated last month by the National Agricultural Statistics Service.

The FSA figures also showed standing acres at 1,969,215, an abandonment of 47 percent, compared with 50 percent projected by NASS in its crop forecast of 2.575 million bales, down 12.6 percent from last seasonΆs 2.947 million bales.

However, a major surprise in the FSA figures, as noted by the Plains Cotton Growers, Inc., was that dryland acres at 2,325,633 totaled 63 percent of planted area. A more typical mix in recent years has been mostly around 50-50.

The FSA figures pegged abandonment at 24 percent on irrigated ground and 60 percent on dryland acreage. This doesnΆt bode well for production potential, Mary Jane Buerkle, PCG communications director, observed.

Per-acre yields would need to average around two bales on irrigated ground and a bale on dryland just to get to the 2012 production, she noted. While the certification process wasnΆt complete, itΆs doubtful enough irrigated acres remained to be certified to make much difference in the preliminary figures, Buerkle said.

Despite the heavy abandonment, the High Plains crop last month was projected at 63 percent of the Texas output and 21 percent of the U.S. upland production.

On the international scene, new reports circulated that China is laying the groundwork to end its controversial cotton stockpiling program and possibly shift to a direct cotton subsidy.

ItΆs generally believed that any new program wouldnΆt be implemented until the 2014-15 marketing year. However, this also could have implications for deferred 2013-14 futures contracts.

China holds the key to prices, many analysts agree. While world stocks are expected to rise 9 percent this crop year to a record 93.8 million bales, according to USDA, the growth continues to occur in China, with a huge supply in ChinaΆs national reserve.

Those reserve stocks are expected to account for nearly 80 percent of ChinaΆs total stocks in 2013-14, USDA analysts say. ChinaΆs cotton policies have continued to support domestic prices above world prices, though the gap has narrowed.

In 2010-11, ChinaΆs 21 percent share of global stocks was its lowest in 20 years. But ChinaΆs 2013-14 share is projected to nearly triple to 62 percent. At the same time, the share of stocks outside China is forecast to fall for the third straight year to 38 percent.

In the rest of the world, the margin by which production is expected to exceed consumption is projected to tighten to 9.53 million bales from 14.64 million bales last season and 25.81 million bales in 2011-12.

The market entered the week having caught the attention of technicians with a downside breakout of an inverted flag formation. This happened when futures quickly ran up a flagpole from about 84 to 94 cents, fell back to 84, moved sideways, and then closed below 84. Technically, this would imply a move down the length of the flagpole to 74 cents.

Meanwhile, trend-following funds sold a net 24,221 lots in futures-options combined during the week ended Tuesday, Aug. 27, to slash their net longs 30.7 percent to 54,734 lots.

This was the smallest net long position held by these funds since June 11 and was just a week after the speculative community had built its largest net longs in months.