U.S. farmers will plant nearly 10% less acreage of the country's main variety of cotton this spring as prices are expected to continue sliding, the U.S. Agriculture Department's chief economist said Thursday.

In a presentation at the department's Annual Economic Outlook Forum, Joseph Glauber estimated the area planted with upland cotton will total 13 million acres in the 2012-13 season, 9.7% lower than last year.

The estimate was lower than that the National Cotton Council's closely watched forecast released earlier this month. The industry group's survey of farmers found acreage would fall 7.5% compared with last year.

Benchmark cotton prices on ICE Futures U.S. have shed nearly 53% over the past 12 months as global demand for the fiber waned amid historically high prices and as apparel makers turned to less expensive, alternative fibers.

This price drop has been expected to curb plantings of cotton this season, as farmers are lured to other crops whose prices have been more stable, such as corn and soybeans. Corn futures on the Chicago Board of Trade dropped around 7.4%, and soy futures around 3% on the Chicago Board of Trade over the past 12 months.

Cotton prices, however, continue to fall. Front-month cotton prices on ICE Futures U.S. hit a two-month low on Thursday, with March delivery trading recently at 87.68c a pound, down 1% on the day. The more actively-traded May contract was trading 1.5% lower at 89.22c a pound.

The price decline, coming as it did after the Agriculture Department's lower acreage estimate, is a sign that the market is still focused on slow global demand for cotton. Top cotton importer China has been purchasing the fiber to replenish reserves that were depleted from lower-than-expected output in previous seasons, but that program is expected to end next month.

Since cotton had surged to a high of $2.27 per pound last March, farmers worldwide planted more last spring and the Agriculture Department expects the season to yield record production in the current season.

"There's too much cotton available for the demand we have," says John Flanagan, president of brokerage Flanagan Trading Corp. "Prices were supported by the Chinese buying for their strategic reserves. That should be just about done."

Glauber estimated prices will average 80c per pound in the 2012-13 season, starting Aug. 1.

-By Leslie Josephs, Dow Jones Newswires; 212-416-4055; leslie.josephs@dowjones.com

(END) Dow Jones Newswires

February 23, 2012 11:14 ET (16:14 GMT)