* Cotton tumbles with other so-called risk assets
* Cotton selling may be overdone as long funds unwind
positions
* Mills now more likely to return to the market

NEW YORK, April 4 (Reuters) - Cotton futures slid with other
commodity markets on Wednesday, falling from 2.20 to more than
3.50 percent to 10-day lows after the release of Federal Reserve
minutes that indicated it was unlikely there would be more
economic stimulus measures.
Minutes from the Fed's March policy meeting, released late
Tuesday, showed U.S. policymakers were less keen on adding
monetary stimulus as the American economy improves, but came out
too late for U.S. cotton market investors to
react.
On Wednesday, funds were thought to have unwound some of the
long cotton positions taken out last week, which pushed prices
into overbought territory on the price charts.
The benchmark May contract on ICE Futures U.S. slid
3.32 cents, or 3.58 percent, to end at 89.32 cents per lb, in a
range extending from 88.92 to 92.64 per lb.
The contract volume came to a hefty 20,121 lots.
New-crop December dropped 2.52 percent to close at
88.60 cents, a 2.28 cent decline. Volume was 4,554 lots.
Also on Wednesday, private-sector jobs data, released by
payrolls processor ADP, showed U.S. employers added 209,000 jobs
in March, and January and February were both upwardly revised,
suggesting the U.S. labor market was continuing to strengthen,
reinforcing the view that further stimulus measures would not be
forthcoming.
While cotton fell along with most other assets perceived to
carry more risk, analysts said exportable commodities like
cotton, soybeans and corn may have suffered more than some of
the others.
"But technically, we were very overbought in cotton and due
for a pull back. This news added fuel to the fire," said Sharon
Johnson, senior cotton analyst at Penson Futures in Atlanta.
She pointed out this weeks spec/hedge report showed
speculators covered 7,000 short positions last week and nearly
doubled their net long positions.
"Today, they reversed themselves and took out more shorts.
I think that's where a lot of the selling came from," she said.
At current levels, Johnson said she thought mills would
return to market after being priced out at higher levels.
"This cleans out the market and opens it back up for more
actual business to take place," Johnson added
The next USDA acreage report is due to be released on June
30, and this will set the stage for the upcoming 2012/13
marketing year (August/July).
Open interest in the cotton market, an indicator of investor
exposure in the market, fell by 374 to 191,444 lots as of April
3, exchange data showed.
On March 30, it rose for the first time in five sessions to
192,184 lots, the highest level since Feb. 9.