Cotton prices in New York fell by the exchange limit for the second time in three sessions on signs of rising production in India, the world’s second-biggest grower.

The Cotton Association of India said today that output may be 35.7 million bales in the year that began Oct. 1. That’s more than the group’s September forecast of 34.45 million and 32.55 million projected by the nation’s Cotton Advisory Board. Futures in New York have surged 71 percent this year, touching the highest price ever last week, as shrinking global supplies trailed increasing demand.

“The debate is whether it’s going to be a big crop or a really, really big crop,” said Gary Raines, an economist at FCStone Fibers & Textiles in Nashville, Tennessee. “India has grown more cotton than they’ve used for a good number of years.”

Cotton futures for March delivery fell the exchange maximum of 5 cents, or 3.7 percent, to settle at $1.292 a pound at 2:38 p.m. on ICE Futures U.S. in New York. The commodity dropped 12 percent in the past week, after reaching a record $1.5195 on Nov. 10.

Earlier, the price climbed as much as 3 percent.

“I see rampant volatility remaining the rule of the day,” Raines said.

A bigger crop in India may help ease restrictions on exports that were limited to 5.5 million bales earlier this year. That limit may be reviewed in December, Farm Minister Sharad Pawar said in October. A bale in India weighs 375 pounds, or 170 kilograms.

Inventories Surge

U.S. inventories monitored by ICE almost doubled last week to 37,086 bales, each weighing 480 pounds. They gained 3 percent yesterday to 38,244 bales. Stockpiles plunged as low as 8,910 bales on Oct. 8, down 99 percent from this year’s high of 1.08 million on June 2.

As of Nov. 14, 78 percent of the U.S. crop was harvested, according to the USDA.

The U.S. is the leading cotton exporter and third-biggest grower. China is the largest producer.