Cotton declined by the most allowed by the exchange in New York on that speculation global production next season will climb, easing supply concerns.

May-delivery cotton slumped as much as 7 cents, or 3.4 percent to $1.9749 a pound on the ICE Futures U.S., before trading at $1.99 at 11:55 a.m. in London. Cotton has more than doubled in the past year.

The fiber may plunge to $1 per pound by Dec. 31, according to the median in a Bloomberg survey of 14 analysts and traders. Global plantings were estimated to rise 7 percent to 36 million hectares, the biggest area in 17 years, taking output to a record 27.6 million metric tons in the year from Aug. 1, the International Cotton Advisory Committee said on March 1.

“These prices may come under pressure because of an expected large global production response in 2011-2012,” Luke Mathews, a commodity strategist at Commonwealth Bank of Australia, wrote in a report e-mailed today.

Cotton surged to a record $2.197 a pound in New York on March 7 as global supply tightened. The commodity has surged 37 percent this quarter, making it the best performer on the Thomson Reuters/Jefferies CRB Index, which tracks 19 commodities.

In the week to March 22, hedge funds and other money managers cut bets on higher prices 64 percent from a September peak, the steepest drop since 2008. Their wagers declined for seven consecutive weeks, the longest stretch since at least June 2006, and total 29,185 contracts, U.S. Commodity Futures Trading Commission data show. One contract equals 50,000 pounds.

Output will beat demand by 1.2 million tons in the next crop year, Cotlook Ltd., an industry researcher, said in February. Global production may rise 11 percent to 127.5 million, 480-pound bales in the year from Aug. 1 as demand gains 3 percent to 120 million bales, the U.S. Department of Agriculture has said.