* Bearish fundamentals keep cotton on defensive
* Market at lowest level since mid-February 2010

NEW YORK, May 17 (Reuters) - Cotton futures settled on
Thursday at a 2-1/4-year low on speculative sales as bumper
supplies and a shaky global economy kept market bears firmly in
control, analysts said.
July cotton on the ICE Futures U.S. exchange slipped
0.32 cent to finish at 76.65 cents per lb, trading from 76.26 to
78.23 cents. It was the lowest close for the spot cotton
contract since February 2010, Thomson Reuters data showed.
The combination of a large cotton crop in the United States
and elsewhere, a strong dollar, economic weakness and the euro
zone debt crisis kept cotton under pressure.
"The bears are fully in control of this thing," said
independent cotton analyst Mike Stevens in Mandeville,
Louisiana. "You have to follow the trend and the trend is down."
Cotton futures are technically oversold, with a 14-day
relative strength index reading of 23. A level of 30 or below
normally means a market is oversold and one of 70 or higher
means it is overbought.
New-crop December fell 0.71 cent to end at 73.90
cents, dealing from 73.78 to 75.60 cents.
Fundamentally, the trade saw export sales as robust.
The U.S. Agriculture Department's weekly export sales data
showed U.S. net upland cotton sales at 178,600 running bales
(RBs, 500 lbs each), with the buying led by top consumer China
at 76,000 RBs.
"The sales were good but it did not seem to matter to the
market," a dealer said.
Cotton is trading at levels last seen before a historic
rally that began in August 2010. That surge lifted prices to a
record at $2.27 per lb, topping even what cotton fetched during
the U.S. Civil War in the 19th century.
Volume on Thursday reached slightly over 17,100 lots, almost
a third under the 30-day norm, Thomson Reuters data showed.
Open interest hit 189,132 lots as of May 16, up for the
third session in a row, ICE Futures U.S. data showed.