* Cold weather may speed up leaf drop - analysts
* Spec net long highest since Sept. 2011 on short covering
NEW YORK, Oct 26 (Reuters) - U.S. cotton futures slipped
again on Friday and posted their biggest weekly fall since
mid-May as fears about a squeeze in domestic supplies subsided
and demand remained slack as the U.S. harvest got under way.
The most-actively traded December cotton contract on ICE
Futures U.S. settled at 72.42 cents per lb, down 0.43
percent. Prices tracked weaker grains and softs markets.
Prices lost 6 percent on the week, ceding the ground they
gained last week when fears of a supply squeeze prompted shorts
to run for cover and pushed prices close to 80 cents, their
loftiest level since mid-June.
So far, the market has found critical support at 72 cents,
with traders speculating that buyers would return to make
purchases at these lower levels. Some still expect prices to
breach the 70-cent market as the harvest ramps up.
Prices were straddling the 20- and 100-day moving averages.
The market remained in contango for a second day, with March
just 0.47 cent above December, as concerns about the
supply shortage subsided.
Many investors sat on the sidelines ahead of the index fund
rolls in the first week of November and ahead of the U.S.
presidential election on Nov. 6. Only 8,350 December contracts
changed hands on Friday, less than half the volume seen on other
days this week.
The market remained on weather watch as Hurricane Sandy
moved along the U.S. East Coast, with the storm expected to make
landfall along the Northeast coast early next week.
"While the storm may not directly impact the U.S. cotton
crop, there may be some indirect impact in the form of colder,
rainy weather and winds and a chance of frost will expedite leaf
drop," said INTL FCStone analysts.
The latest CFTC data revealed the extent of the short
covering last week, with the speculative net long jumping to
just under 24,000 lots, the market's largest net long since
September 2011.
The rise was largely driven by a drop of over 18,000 lots of
shorts, with only 18 longs added.
