By Wendy Pugh

March 2 (Bloomberg) -- Cotton production in Australia, the world’s fifth-biggest exporter, may rise 30 percent next season, boosted by greater water supply and rising prices.

Output may increase to 484,000 metric tons in the year to June 30, 2011, from 371,000 tons this season, the Australian Bureau of Agricultural and Resource Economics said today in a report. Sugar production may gain 6 percent next fiscal year and wheat output may rise 1.3 percent, it said.

Cotton harvesting is forecast to increase as rainfall eases a prolonged drought that cut irrigation supplies. The states of Queensland and New South Wales have received beneficial rain since Christmas, according to industry group Cotton Australia Ltd. The fiber is mostly picked from March to May and the 2010- 2011 crop will planted from October.

“Water availability we expect will gradually improve and also with the significant rainfall we have had over the past few months, we reckon that will be some help in terms of dam levels,” bureau Chief Commodity Analyst Jammie Penm said in an interview in Canberra.

Cotton traded on ICE Futures U.S. in New York jumped by 19 percent in February, the biggest monthly gain in two years, as demand by textile mills and investors climbed.

“There will be a continued recovery in world prices because stock levels for cotton have been declining quite significantly, so that will provide support for prices in the forseeable future,” Penm said.

The Cotlook A index, which includes the five cheapest prices for cotton offered in Far East ports, may average 82 cents a pound in the year ending July 31, 2011, rising from 74 cents this year, the bureau forecast.

Sugar Output

Raw sugar production in Australia, the world’s third- largest shipper, may gain 6.2 percent to 4.8 million tons in the year to June 30, 2011, from 4.5 million tons.

The coming fiscal year will show the first increase in the harvested area in eight years, the bureau said. Export volumes for next fiscal year may rise to 3.4 million tons from 3.2 million tons.

Wheat output in Australia, the world’s fourth-largest exporter, may increase to 21.94 million metric tons in the year ended June 30, 2011 from 21.66 million tons this year.

The area planted may be curbed after grain prices dropped and lamb and sheep prices rose, Penm said.

Exports may be little changed at 13.89 million tons next year, from 13.87 million tons this season, the bureau said.

The country’s farmers rely on rains to plant wheat from April to June with the grain harvested from October to January.