BEIJING, Nov 14 (Reuters) - China's cotton output in 2011 is expected to increase 21 percent from a year earlier to 7.55 million tonnes, a government think tank said on Monday.

The estimate by the information center under the China National Cotton Reserves Corp, given in a report published on www.cncotton.cn, is both higher than an earlier government estimate of 7.2 million tonnes and an industry survey of 7.4 million tonnes .

An area increase of 8.5 percent and a unit yield rise of 12 percent helped to push up production, the report said.

However, industry participants said the cotton planting area may fall sharply next year as cotton prices have tumbled since the start of this year and rising production costs have eaten into farmers' profits.

"An area fall of 10 percent (next year) is very possible," said Lu Yun, an analyst with commodities consultancy firm Shanghai JCI.

The benchmark four month rolling cotton futures contract traded on the Zhengzhou Commodity Exchange has fallen more than 40 percent since mid February.