* Buyers absent from market during Chinese new year
* Cotton market may establish some downward momentum - analyst
* May-March spread widens for 3rd straight session
By Chris Prentice
NEW YORK, Feb 13 Cotton prices fell for a second day on Wednesday, due to market consolidation and an absence of buyers in China, the world's largest consumer, during the new year holiday.
The most-active May cotton contract on ICE Futures U.S. dropped 0.89 cent, or 1.1 percent, to settle at 82.21 cents per lb. Earlier in the session, it fell as low as 81.35 cents a lb, the benchmark contract's lowest intraday price since Jan. 28.
Wednesday marked the fiber's second daily loss this week. Last week, cotton posted a weekly loss for the first time this year, stemming its longest bull run since early 2011. That recent five-week rally left cotton prices butting up against highs of about 84 cents a lb.
"China is on vacation. So buyers are not inquiring for cotton. The other part is that prices were overdone. We may be establishing a new trend, and it's overdue," said John Flanagan, an analyst at Flanagan Trading Corp. in North Carolina.
Speculators pushed cotton prices up about 7 percent since the start of the year, increasing their long position in the cotton market to a 2-1/2-year high in the week up to Feb. 5. But a global surplus, forecasts of high global carryover stocks at the end of the crop year and competition from lower-priced alternatives have underpinned the cotton market.
"There's a consolidation pattern here. It would really take some bullish news to push (the price) up, and there isn't any," said Nick Gentile, senior partner of commodity trading consultancy Atlantic Capital Advisors.
Cotton received an upward push at the start of the week from U.S. government and industry group forecasts of lower plantings for next year's U.S. crop, but those projections are more bullish for the 2013/14 cotton marketing year, rather than the current one.
Exchange stocks continued to grow, totaling nearly 204,000 480-lb bales as of Feb. 12, holding at highs not seen since May 2011. Another 76,000 bales awaited U.S. Department of Agriculture review on Wednesday. The first notice date for delivery against the March contract is set for Feb. 22.
The presence of those readily available stocks has pressured prices.
The spot March contract, which held an open interest above 57,000 lots, closed down 0.99 cent, or 1.2 percent, at 80.82 cents a lb on Wednesday.
The spread between the benchmark May contract and the spot March contract widened for the third straight session to 1.39 cent, the largest premium the second-month held to the spot contract since November.
Trading volumes were heavy on Wednesday, despite China's absence from the market, partially because it was the last day of the index fund rolls.
More than 55,000 contracts were traded, compared to a 250-day average of under 19,000, according to preliminary Thomson Reuters data. (Reporting By Chris Prentice; editing by Gunna Dickson)