Weaker Chicago Board of Trade grains prices pulled cotton futures prices on the Intercontinental Exchange (ICE) to seven-session lows Thursday. Cotton is looking to corn, soy, and wheat prices for direction as the industry waits for USDA’s March 3 1 prospective plantings report.

“Cotton prices will continue to trade sideways with the possibility of light, long liquidation ahead of USDA’s prospective plantings report,” an analyst said. “I don’t expect much action in the market until the new figures are released.”

In February, USDA pegged 2010 acreage at 10.5 million acres, up 15 percent from last year, as higher cotton prices since mid- 2009 likely will encourage more plantings. Next season’s cotton supplies are expected to be ample, with USDA projecting 16 million bales if weather conditions are favorable. The crop, which will be harvested in the fall, is reflected in the December contract.

Cotton prices recently have traded in a range of 80.00 to 84.60 after the market hit two-year highs on March 1. The May contract peaked at the top end of that range. Futures touched that point amid USDA’s outlook that supply by 13 percent in the 2009-10 crop year which ends July 31.

“Now the cotton market lacks fresh bullish fundamental news to push prices higher,” a trader said. “Even the cotton sales data reported Thursday did little to support the market because prices have risen too far to attract buying from textile mills.”

Net export sales of U.S. cotton sharply decreased in the week ended March 18 to 86,200 bales from 263,200 bales sold the week before, according to USDA. Major buyers were Turkey, South Korea, Bangladesh, and Taiwan. Net sales of 26,600 bales for delivery in 2010-11 were primarily for Brazil and Turkey. However, export shipments of U.S. cotton increased to 297,200 bales, from 284,700 the previous week. Primary destinations were China, Turkey, and Mexico.

In the spot cotton market, growers in Texas, Oklahoma, and Kansas sold 3,058 bales online in the week ended March 25 compared to the previous week when 4,319 bales were traded. Prices received by producers ranged from 62.23 to 73.39 cents per pound versus 65.90 to 69.48 cents per pound one week earlier.

Cotton prices also were buoyed this week by the anticipation of continued strong demand and a weaker U.S. dollar. USDA estimates show cotton demand surpassing production by 13 percent in the ongoing AugustJuly marketing year. The U.S. is the world’s leading cotton exporter and the third largest cotton producing country behind China and India.

Industry watchers expect China’s imports to climb in 2010 amid an economic recovery which should bode well for cotton prices. According to the country’s customs administration, China's February cotton imports already have risen sharply from the same time last year.

Analysts attribute the drastic upswing in cotton consumption to a restocking of retail textile inventories amid expectations for an economic recovery. Textile purchases often ebb and flow with consumers’ discretionary spending.

Cotton supplies are generally expected to remain tight until fall when the U.S. harvest comes in; however, the crop has yet to be planted. Traders expect recent high cotton prices to lead to more planted acres, and ultimately if all goes well, higher production.