July 4 (Bloomberg) -- The cotton market went from boom to bust in less time than it takes a farmer to grow a single boll.

Two months ago, a drought threatened output in the U.S., the worldΆs largest exporter, and stockpiles were heading for a two-decade low. Then came the rains in Texas, the top grower, sparking a planting surge that the government said will send inventories to a six-year high before the 2015 harvest.

The “stunning” weather reversal may boost U.S. output by 32 percent, Plexus Cotton Ltd. said in a report. Prices that in March were the highest in 25 months are now down more than any commodity this year. Rising supply will help extend a global surplus into a fifth year, reducing costs for clothing makers including Hanesbrands Inc. Futures may drop 6.1 percent to 67.7 cents a pound by year end, the lowest since June 2012, a Bloomberg survey of seven analysts showed.

“The growing season is proceeding well here, they have pretty good rains in Texas,” Donald Selkin, who helps manage about $3 billion of assets as chief market strategist at National Securities Corp. in New York, said June 27. “Global supplies are going to be very ample. Any supply concern has been eased off.”

Cotton futures fell 15 percent this year to 72.06 cents on ICE Futures U.S. in New York, down 26 percent from a high of 97.35 cents on March 26. The Bloomberg Commodity Index of 22 raw materials gained 6.7 percent since the end of December, while the MSCI All-Country World Index of equities advanced 6.3 percent. The Bloomberg Treasury Bond Index rose 2.6 percent.

Drenching Rain

In the cotton belt of West Texas, the biggest U.S. growing region, rainfall over 60 days through June 23 was as much as 8 inches (20 centimeters), double the amount from a year earlier and the most during the planting season since 2007, according to World Weather Inc. Texas has been mired in drought for much of the past four years, which helped cut the stateΆs cotton output in 2013 by 17 percent.

Eddie Smith, who has been growing cotton since 1973, said he was inspired by the improved soil moisture. He increased planting of the fiber to 3,200 acres (1,295 hectares) from 2,600 acres last year on the 5,000 acres he farms in the Texas counties of Crosby and Floyd, where he also produces wheat and sunflowers.

“The fields look much better than in the last four years,” Smith, 63, said by telephone June 19 from Floydada, Texas. “The rainfall has been stunning. The crop potential is excellent.”

The government agrees. The U.S. Department of Agriculture on June 11 raised its production forecast from a month earlier by 3.4 percent to 15 million bales, a 16 percent gain from last year. Plexus said the crop may exceed 17 million. On June 30, the USDA said planting rose 9.2 percent to 11.37 million acres.

Bigger Surplus

Domestic inventories on July 31, 2015, will surge 59 percent from a year earlier to 4.3 million bales, the most in six years and the biggest annual gain since 2005, the USDA said. ThatΆs enough to make 924.5 million jeans or 5.23 billion T- shirts, according to data from the National Cotton Council in Cordova, Tennessee.

In the season starting Aug. 1, world production will exceed demand by 3.63 million bales, or almost what the U.S. consumes in a single year, the USDA estimated on June 11. The five-year surplus will leave inventories before the 2015 harvest at 102.71 million bales, double the amount in 2011 and the highest on record going back to 1960, the department said. A bale weighs 480 pounds (218 kilograms).

Weather Risk

Crops still face the risk of weather damage during the months from planting to harvest.

A hailstorm and strong winds last month damaged about half of the 14,000 acres planted by Ben Royston, a grower in Seminole, Texas. Planting in China, the worldΆs largest grower and consumer, will drop 13 percent in part because high temperatures reduced soil moisture in several regions, the China Cotton Association said June 18. A below-average monsoon in India, the second-largest producer, is threatening crops, the Meteorological Department said.

“The price has pretty much factored in the bearish fundamentals,” Jordan Kotick, the Toronto-based head of cross- asset strategy at RBC Capital Markets, said in a telephone interview June 23. “When it comes to agricultural commodities, the weather is always a wild card that can break markets in any particular direction.”

Drought Recedes

Even with smaller crops in China and India, the world will produce more than it consumes. Output in the 12 months from Aug. 1 will be 115.92 million bales, compared with demand of 112.29 million, the USDA said.

“World supply is way too much compared with world demand,” John Flanagan, the president of Flanagan Trading in Fuquay-Varina, North Carolina, said in a telephone interview. “When thereΆs no good economic growth, there isnΆt good demand for cotton products.”

Last month, the World Bank cut its 2014 outlook for global expansion to 2.8 percent from 3.2 percent, citing slowing growth in China and the U.S. Cotton imports by China will drop 41 percent to 8 million bales, the least since 2009, the USDA projects.

The biggest supply gain will come in the U.S. as prospects improve in Texas, which accounted for 35 percent of domestic output last year. As of June 24, 37 percent of the state was in severe-to-exceptional drought, down from 41 percent a week earlier and 61 percent a year earlier, according to the U.S. Drought Monitor.

The state probably will boost output by about 61 percent to 6.7 million bales, which would be the biggest crop since 2010, according to Shawn Wade, director of policy analysis and research at Lubbock-based Plains Cotton Growers Inc., the biggest growersΆ group in Texas.

Cheaper Materials

Rising supply will benefit apparel makers, whose cotton spending can be half the cost of goods sold, said Chen Grazutis, an apparel analyst with Bloomberg Industries in New York.

Montreal-based T-shirt maker Gildan Activewear Inc. said May 2 it expected cotton prices to drop in the second half of its fiscal year, after higher fiber prices eroded profit in the second quarter ended March 30.

“Supplies and stockpiles are good,” said Ashmead Pringle, the president of Atlanta-based GreenHaven Commodity Services, which oversees about $350 million. “The market still has some weakness ahead.”