Cotton production in Australia, set to be the worldΆs third-biggest shipper, may drop for a second season next fiscal year, curbing supplies for export, according to a government commodity forecaster.

Output may reach 905,000 metric tons in the year starting July 1, from 945,000 tons a year earlier, the Australian Bureau of Agricultural and Resource Economics and Sciences said in a report today. Exports may drop to 924,000 tons, from a record 1.1 million tons a year earlier, Canberra-based Abares said.

Declining output in Australia will curb global supplies, helping extend the fiberΆs 34 percent rally since dropping to a 31-month low on June 4 on signs of lower global output and rising demand. Prices rose for a fifth day yesterday, reaching the highest since May. Global production will drop 7.3 percent in the year starting Aug. 1 as world consumption climbs 2.1 percent, Cotlook Inc. said Feb. 21

Australian farmers may sow 434,000 hectares of cotton in 2013-2014 from 442,000 hectares a year earlier, Abares said.