The price of cotton is expected to drop by 51% to $1/pound by the end of 2011, analysts and traders surveyed by Bloomberg say.

Currently, cotton prices are down 3.4% to $1.975/pound. Prices are expected to drop further in light of an 11% production increase this coming harvest season, while demand is up only 4%. Hedge funds' bets on cotton prices rising have dropped more sharply than they have in the past three years.

At the beginning of March, cotton prices rose to $2.197/pound due to floods in Australia and Pakistan and frost that destroyed China's cotton harvest. The last time prices rose this high was after the Civil War. However, in real terms, cotton is down compared to previous decades. In 1973, the price of cotton hit 99¢/pound, equivalent to $4.92/pound today when adjusted for inflation.

Since July 2010, cotton prices have soared 178%, with farmers planting more cotton, which could affect other crops like corn and soy, whose prices have also risen this past year. Since last June, the price of corn has risen 79%, while soybeans were up 50%.



Israel grows the Acala and Pima varieties of cotton on some 28,570 hectares of land. All the country's cotton crops are drip-irrigated, and Israel sees some of the highest cotton yields in the world, with Acala cotton average 5.5 tons per hectare and an average Pima yield of 5 tons per hectare.