OREANDA-NEWS. February 05, 2015.  ICE cotton hit a more than one-month high but later fell in heavy volume on Wednesday, trading entirely above a key technical level for the first time in more than eight months, as part of a broader selloff in the commodity complex.

The most-active March cotton contract on ICE Futures US dropped 0.22 cent, or 0.4 percent, to settle at 61.23 cents a lb after rising as high as 61.70 cents, its highest level since Dec. 31.

Fiber's losses came as grains and crude oil prices fell, following sharp rallies in the prior session, which traders today said may have been overdone.

"Yesterday's short-covering rally was today's dead cat bounce," said Chris Kramedjian, a risk management consultant at INTL FCStone in Nashville, Tennessee.

"Clearly there's a lot of fear that the recent rally was just a temporary bounce."

Before Wednesday's losses, cotton had gained in six of the previous seven sessions after hitting a near 5-1/2 year low of 57.05 cents a lb on Jan. 23, buoyed by speculator short-covering and a string of strong export sales reports.

Tuesday's rally saw cotton hit buy-stops after breaking through key technical resistance levels.

On Wednesday, as a result of these sharp gains, cotton traded entirely above its 100-day moving average at 61.00 cents a lb for the first time since May 22.

This led to heavy volumes, as the 100-day moving average is a commonly-used indicator for market participants to trade around, Kramedjian said.