Cotton futures are to retreat into 2018 more significantly than investors are factoring in, sapped by rising world production – although reviving economic growth stands to raise demand further ahead.

For now, cotton prices look poised for more of the sharp moves which saw futures soar 14 per cent in three sessions in mid-May to a near-three-year high, only to give back nearly all that found over the following week.

Most of the additional production - besides that in China, and an amount equivalent to some four million bales, the size of Australia's harvest - will be available to world markets.

This will weigh on the price of cotton futures. However, further ahead, a positive backdrop for demand is expected, boosted by world economic growth pegged at 3.65 per cent for 2018 and 3.68 per cent for 2019.

Cotton demand is expected to grow 1.5 per cent next year and two per cent in 2019. Expansion would be highly concentrated in developing Asian markets, bar China. Consumption growth in the spinning sectors of Vietnam, Bangladesh and Indonesia may drive global demand growth.

Area in India is expected to increase eight per cent year on year in 2017-18. A hike in US cotton sowings is possible this year, thanks to the better returns offered to growers by the fiber compared with the likes of corn, rice, soybeans and wheat.