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Cotton headed for its longest losing streak since July as elevated prices and slowing economic growth dents demand for the soft commodity.
 
Earlier this week the IMF downgraded its global growth estimates for 2011 and 2012, while separate reports showed that global cotton supply seems sufficient to match demand in the coming season. Foreign cotton production is expected to increase by 10 million bales from last year, resulting in one of the smallest foreign cotton deficit gaps since 2004-2005. This means that Asian importers may be less dependent on US cotton supplies this season. As a matter of fact, recent reports have shown large cancellations in US export sales of cotton.
 
Uncertainty over the European sovereign debt crisis and the Fed’s decision to refrain from additional QE also weighed on cotton prices, with the former expected to result in weaker demand for textiles from Europe in the months ahead.