Profit-taking, hedge selling and technical considerations curbed rallies led by short covering in cotton futures last week amid worries about overall global demand even after another whopping sale to China.

Spot December closed Thursday even with a week earlier at 99.50 cents and most-active March settled with a loss of 240 points to 96.48 cents. The December 2012 contract shed 300 points to 93.64 cents.

Near December, where first notice day arrives Wednesday, quickly lost momentum after achieving a technical objective. It surged to 104.69 cents, at the upper end of the Bollinger Bands, and crossed above its 100-day moving average for the first time since June 21.

December had achieved a 50 percent retracement (100.51) of the 909-point break from the October high of 105.05 to the November low of 95.96 in the face of massive fund rolling of December longs to March.

The inverted December-March spread took a wild ride, swinging from a low of 80 points on Monday to 490 points on Tuesday when it collapsed 286 points. Then it closed Thursday at 302 points with both contracts down the 400-point daily limit. December had traded at a 57-point discount just eight sessions earlier.

Some of the brisk spread trading early in the week may have stemmed partly from overloaded short futures accumulated with the exercising of put options being rolled forward following the last trading day in December options on Nov. 11. Exercised were 13,152 calls and 45,799 puts, a ratio of 1:3.48

The big imbalance of puts over calls also was seen as likely resulting in more buying to cover new shorts than selling to liquidate new longs. However, it was not known how many puts may have been covered with offsetting futures positions.

Anyhow, the sharp widening of the December premium had fueled speculation that a major commercial stopper or stoppers may have been preparing to take December deliveries.

But a decline of 51,294 lots from a week earlier to 13,142 in DecemberΆs open interest going into ThursdayΆs session was viewed by some analysts as softening the potential impact. Stocks in deliverable position grew 14,837 bales to 52,458, with 11,501 bales awaiting review.

Steep losses in other commodities, skidding equities and dollar strength weighed on cotton at the end of the week after USDA reported a huge sale of U.S. cotton to China for the second week in a row but again with scant other business.

Doubts deepened about the ability of Europe — a major per capita consumer of textiles — to keep its sovereign debt from spinning out of control, with the regionΆs biggest nations split over the European Central BankΆs bond buying role. Concerns also mounted over the lack of progress by the “supercommittee” charged with dealing with U.S. debt problems.

Net all-cotton sales of 646,800 running bales — second largest since September 2010 — lifted 2011-12 commitments to 9.245 million. China booked 630,500 bales, 98 percent of the total, likely again for its state reserves, and has accounted for 49 percent of the seasonΆs commitments.

Commitments reached about 84 percent of the USDA forecast, compared with about 89 percent of final exports at the corresponding point last season. The gap behind year-ago commitments narrowed to 3.11 million running bales or to about 25 percent.

All-cotton shipments of 170,700 running bales hiked exports for the season to 1.466 million, about 13 percent of USDAΆs projection and about 16 percent of the commitments. A year ago, shipments were about 16 percent of final exports.

Shipments need to average roughly 256,600 running bales a week to reach the USDA estimate. The USDA earlier this month cut its export forecast to 11.3 million statistical 480-pound bales, down about 21 percent from last season.

In cash trading, sales on The SeamΆs grower-to-business exchange slowed sharply as prices slumped but still reached a crop year high of 21,955 bales, up from 15,640 bales the prior week.

Prices averaged 98.40 cents, up from 96.06 cents, on daily averages ranging from 90.37 and 100.81 cents. Loan redemption rates averaged 55.15 cents and ranged from 52.86 to 56.28 cents.

Trading slowed on the business-to-business exchange to 13,985 bales from 16,094 bales. The cotton brought an average price of 94.29 cents, up from 92.16 cents, and loan redemption rates averaging 51 cents, down from 52.71 cents.

In international news, ChinaΆs cotton output is expected to increase 21 percent from a year earlier to 7.55 million metric tons (34.677 million bales), Reuters reported, quoting a government think tank.

The estimate, contained in a report published on a website under the China National Cotton Reserve Corp., is up from an earlier government forecast of 7.2 million tons (33.069 million bales).

An area increase of 8.5 percent and a unit yield rise of 12 percent helped to lift production, the report said. However, industry sources said cotton plantings may fall sharply next year as prices have tumbled and rising production costs have eaten into farmersΆ profits.

The USDA has projected ChinaΆs 2011-12 crop at 33.5 million bales, up 10 percent from its estimate for last season, off a harvested area of 5.5 million hectares (one hectare equals 2.471 acres), up 7 percent from a year earlier.

On the U.S. crop scene, cotton harvesting advanced nine percentage points to 79 percent completed during the week ended Nov. 13. This was three points ahead of last year and 15 points ahead of the five-year average.

Harvesting in Texas progressed at an 11-point pace to 78 percent done, up from 67 percent a year ago and 52 percent on average. The harvest lagged state averages only in Alabama, Arizona and Oklahoma and neared completion in the Delta.