June 5 (Bloomberg) -- Cotton futures fell to a one-week low on speculation that demand for the fiber used in clothing and textiles will continue to be weak. Orange juice also declined.

Textile mills in China purchased just 51 percent of the cotton reserves the government put up for auction. Mills might have had bigger inventories on hand than previously estimated, analysts said. U.S. export sales of upland cotton in the four weeks ending May 28 dropped 58 percent from a year earlier, Department of Agricultural data show.

“We’re still in a retail-sales depression,” said Frank Weathersby, the president of Affinity Trading LLC in Fort Walton Beach, Florida. “Cotton is not needed right now.”

Cotton futures for July delivery fell 1.77 cents, or 3.1 percent, to 55.11 cents a pound on ICE Futures U.S. in New York. The fiber dropped 3.3 percent for the week, the biggest such decline since May 15 and the third loss in four weeks. Earlier, the price fell to 54.85 cents, the lowest for a most-active contract since May 29.

Mill orders are unlikely to pick up unless futures fall below 54 cents, Weathersby said.

Cotton has tumbled 25 percent in the past year as the global recession reduced consumer spending.

Futures may also have fallen today as the dollar strengthened, eroding the appeal of commodities as a hedge against inflation. The U.S. Dollar Index, a measure of the greenback’s value against six major currencies, rose as much as 1.8 percent after the Labor Department reported fewer job cuts in May than economists had projected. The Reuters/Jefferies CRB Index of 19 raw materials fell as much as 0.8 percent.

The U.S. is the world’s largest cotton exporter. China is the leading consumer and buyer of U.S. supplies.

Orange Juice

In another ICE market, orange-juice futures for July delivery fell 1.15 cents, or 1.3 percent, to 90.4 cents a pound, declining for the fourth straight day. The commodity plunged 4 percent for the week, the steepest such decline since Feb. 6.

The price is still up 33 percent this year because of a smaller orange crop in Florida, the biggest grower after Brazil.

To contact the reporter on this story: Yi Tian in New York at ytian8@bloomberg.net.

Last Updated: June 5, 2009 16:14 EDT