Cotton Declines by Limit on Speculation Production to Advance

Cotton declined in most allowed by the exchange in New York that the production of global speculation will rise next season, easing supply concerns.
Cotton May delivery plummeted to 7 cents, or 3.4 percent to $ 1.9749 a pound in the U.S. ICE Futures, before trading at $ 1.99 at 11:55 am in London. Cotton has more than doubled in the last year.
The fiber can plunge to $ 1 per pound by December 31, according to the median forecast in a Bloomberg survey of 14 analysts and traders. global plantation is estimated to increase 7 percent to 36 million hectares, the largest area in 17 years, taking the output to a record 27.6 million metric tons in the year from 1 August, the Committee International Cotton Advisory, said on 1 March.
"These prices may come under pressure due to a large response expected world production in 2011-2012," Lucas Mathews, a commodity strategist at Commonwealth Bank of Australia, wrote in an emailed report today.
Cotton rose to a record U.S. $ 2.197 per pound in New York on 7 March as tight global supply. Commodity has soared 37 percent this quarter, which is the best performer in the Thomson Reuters / Jefferies CRB Index, which follows 19 commodities.
In the week ended March 22, hedge funds and other money managers cut bets on higher prices of 64 percent from its peak in September, the biggest drop since 2008. Betting declined for seven consecutive weeks, the longest streak since at least June 2006, and the total of 29,185 contracts, U.S. Commodity Futures Trading Commission data show. A contract is equal to 50,000 pounds.
Output will exceed demand by 1.2 million tonnes in the next, Cotlook Ltd., an industry researcher said in February. World production could rise 11 percent to 127,5 million bales of 480 pounds in the year from 1 August as gains in demand of 3 percent to 120 million bales, the U.S. Department of Agriculture. UU. he said.

(Source: http://www.bloomberg.com/news/2011-03-28/cotton-declines-by-limit-on-speculation-production-to-advance.html)