The world will use 111.34 million bales in the year ending July 31, compared with 114.27 million projected in November, the USDA said today in a report. Demand will drop for a second straight year, sending stockpiles to 57.67 million, up from 54.96 million projected a month ago and the highest since 2009.

Prices have plunged as much as 60 percent since reaching a record in March as the economy slowed and farmers boosted output to the highest ever. The USDA said its forecast reflects “continued weak mill demand owing to an uncertain world economic outlook” and a shift by clothing makers to more polyester after cotton prices surged earlier this year.

“The USDA is seeing a more shaky economy worldwide,” Mike Stevens, an independent trader in Mandeville, Louisiana, said by telephone. “What’s really scary is the losses to polyester, because when a cotton spindle is replaced by man-made fiber, it’s very difficult to get that back.”

Global production will be 123.42 million bales, down from 123.89 million forecast in November, mostly because a drought reduced production in the U.S., the department said. Output still will be a record, up 7.1 percent from a year earlier.

The government’s forecast of U.S. demand was reduced by 200,000 bales, or 5.3 percent, to 3.6 million bales, reflecting a slowdown in recent months.

Price Slump

Cotton for March delivery fell 1.2 percent to 90.91 cents a pound at 10:52 a.m. on ICE Futures U.S. in New York, heading for a third straight decline. The most-active contract reached a record $2.197 on March 7, after surging 92 percent last year.

The agency also pared its U.S. production forecast for a second straight month on losses in Texas, where the most severe drought in at least a century decimated the crop.

U.S. output will total 15.8 million bales from the harvest that started in August, down from the November projection of 16.3 million, the department said today. Nine analysts surveyed by Bloomberg News expected 16.1 million, on average. Last year’s cotton crop was 18.1 million bales.

U.S. stockpiles at the end of the season will total 3.5 million bales, down from the prior estimate of 3.8 million, according to the report. A bale weighs 480 pounds, or 218 kilograms.

The U.S., the largest exporter, may ship 11.3 million bales in the year that began on Aug. 1, unchanged from last month’s estimate, the USDA said.

“Textile manufacturers and mills are having an awful time using up all the high-priced cotton they’re already saddled with,” Rogers Varner Jr., the president of Varner Bros., a brokerage in Cleveland, Mississippi, said in a telephone interview before the report.