Australia reduced its cotton production estimate to the lowest in three years after a drought scorched crops in the worldΆs third-biggest exporter.

Output may decline to 940,000 metric tons in 2013-2014 from 975,000 tons estimated in December and 1.02 million tons a year earlier, the Australian Bureau of Agricultural and Resource Economics and Sciences said in a report today. ThatΆs the smallest crop since 2010-2011, according to bureau data.

About 70 percent of Queensland state is in drought after its driest December since 1938, while New South Wales, the countryΆs biggest producer, had the least rain in January since 2003, Bureau of Meteorology data show. Cotton Australia, a Sydney-based growersΆ group, said last week that output may be less than 4 million bales of 227 kilograms (908,000 tons).

“Summer-cropping zones in northern New South Wales and Queensland have been very hot and dry,” said Peter Collins, manager of agricultural commodities at Canberra-based Abares. “ThatΆs meant that thereΆs been negligible area planted to dryland cotton because there wasnΆt the soil moisture.”

Australia planted 392,000 hectares (968,653 acres) of cotton in 2013-2014, less than the 413,000 hectares estimated in January and 442,000 hectares a year earlier, according to Abares. Dryland cotton refers to crops that are grown without irrigated water and rely on rainfall.

The U.S. Department of Agriculture yesterday lowered its global stockpiles estimate by 1.2 percent to 96.47 million 480-pound bales amid lower world production. Cotton for March delivery in New York declined 0.3 percent to 87.08 cents per pound today, paring gains for futures to 2.9 percent this year.