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Cotton fell to a 7-day low on Tuesday on speculation that demand may fall on a worldwide decline in stocks and a possible U.S. economic recession.

In an effort to stabilize the economy, the Federal Reserve announced this morning that it would cut its key lending interest rate by 0.75 percentage points to 3.5 percent.

U.S. stocks markets fell heavily in early trading but rebounded to end the day with moderate losses.

Cotton Futures for March fell 0.61 cents, or 0.9 percent, to 70.12 cents a pound on the New York Board of Trade.

Last Monday, Cotton reached a record of $72.96 not seen since March 2004. According to government data for the week ending Jan. 15, hedge-fund managers raised their net-long position on the New York Mercantile Exchange by 9 percent to 73, 067 contracts.