Cotton futures dropped 2% on Friday and were heading for their third consecutive week of losses as investors fretted over the impact on China's economy from a virus outbreak that could hurt demand for the natural fiber in China.

Cotton contracts for March fell 1.42 cents, or 2.1%, to 67.63 cents per lb by 1:48 p.m. EST (1848 GMT). It traded within a range of 67.56 to 69.35 cents a lb. For the week, the contract was set to decline 2.6%.

“The market has been impacted by how the coronavirus will affect domestic apparel consumption within China and how it will affect the confidence of the Chinese exporters and that will impact their business," said Ed Jernigan, chief executive of Jernigan Global, a cotton textile supply chain manager.

The United States drew China's wrath with a travel warning on Friday. On Thursday, the World Health Organization declared the epidemic a global emergency after the virus killed more than 200 people.

“The epidemic in China is now threatening to throttle financial institutions over the near-term and will likely continue to be the major focus of markets over the near-term, at least," Louis Rose, director of research and analytics at Tennessee-based Rose Commodity Group, said in a note.

Global equity markets were poised for their first monthly loss since August owing to fears of virus impact of global economy. The United States is one of the world's biggest producers of the natural fiber, while China is the largest consumer.

“While I do think cotton acreage is likely to be lower which is somewhat supportive, the real issue is demand and how the U.S is going to manage its exports amid low domestic consumption," Jernigan added.

Total futures market volume rose by 7,312 to 36,128 lots. Data showed total open interest fell 583 to 266,922 contracts in the previous session. Certificated cotton stocks deliverable as of Jan. 30 totaled 6,792 480-lb bales, unchanged from 6,792 in the previous session.