Cotton prices to drop 51% by Dec 31

Farmers around the world are planting more cotton to profit from high prices.

Cotton prices will drop 51% to US$1 a pound by December 31 according to a median in a Bloomberg survey of 14 analysts and traders. Already Hedge funds are cutting their bets on bigger prices by the most in three years said http: www.businessweek.com. However the prices could rally to $2.30 by June owing to supply side scarcity. Cotton output is expected to climb 11% to 127.5 million bales in the coming year beginning August 1 even as demand would gain 3% to touch 120 million bales. Farmers around the world are planting more cotton to profit from high prices.

However this is at the expense of corn and soybeans. In the year ending July 31 China is expected to lack 17.5 million bales according to USDA. The production in US is expected to jump 6.6% to 19.5 million bales in the coming crop year even as Indian output may touch a record. Australian produce is also expected to surge. All these factors may expand global stockpiles by 18% to 50 million bales in July 2012.

(Source: http://www.indiainfoline.com/Markets/News/Cotton-prices-to-drop-51-percent-by-Dec-31/5116379422)