World production of cottonseed, used to make cooking oil and as a supplement in livestock feed, may drop to a three-year low on smaller plantings, Oil World said.

Global cottonseed output may be 43 million metric tons, or 600,000 tons less than estimated last month and 3.9 million tons lower than the previous season, the Hamburg-based researcher said today in an e-mailed report. Cotton futures were down 37 percent from a year ago by yesterday on ICE Futures U.S. in New York . Lower prices encouraged farmers in North and South America, Africa and Asia to cut plantings in favor of other crops, Oil World said. In the U.S., acreage fell 14 percent.

“Smaller supplies are expected to enforce a decline of world cottonseed crushings in the vicinity of 2.5 million tons in October-September 2012-13,” Oil World said. “This will reduce production of cotton oil and meal correspondingly, aggravating the supply shortage stemming from the likely decline of global soybean crushings anticipated for the remainder of 2012.”

Rallies in oilseed prices including soybeans, which surged 16 percent since the start of June by yesterday on dry U.S. weather, may increase demand for cottonseed, Oil World said. World cottonseed exports may rise to 1.14 million tons in 2012-13, up 3 percent from a year earlier and nearly double the size of shipments three years before, according to the report.