Cotton December futures prices moved down as prospects for continued economic recovery in many developed countries became more pessimistic, according to the monthly economic letter on the US cotton market.

Cotton A Index prices also fell, the August report noted, moving from over 116c/lb to less than 109c/lb, but rebounding slightly in more recent trading.

“Weak demand continues to be a feature of cotton markets, and the uncertainty posed by a darker macroeconomic outlook poses questions regarding the potential for demand growth in 2011/12,” the report said.

The slowdown in demand for cotton, which began during the spring, has also led the US Department of Agriculture to lower world consumption estimates for the second month in a row.

The current estimate of 115.2m bales for 2011/12 is 1.6m bales below the forecast in July, with 2010/11 consumption levels also falling by 1m bales to 113.9m bales.

According to the report, the greatest declines have come in India, Bangladesh, Mexico and Turkey.

Meanwhile, production estimates have decreased, declining 559,000 bales for 2010/11, and 2011/12 forecasts also fell 704,000 bales.

As consumption falls are outpacing production declines, stocks are beginning to rebuild, with estimated world ending stocks up 588,000 bales for 2010/11, and forecast to be up 1.7m bales for 2011/12.

“Given that supplies are expected to remain tight relative to demand in 2011/12, there may be some reason to expect prices to eventually find support despite recent weakness,” the report suggested.