By Catarina Saraiva Dec. 2 (Bloomberg) -- Cotton prices rose for the second time this week after an industry group forecast a 13 percent drop in global inventories, the most in seven years. Warehouses will hold 10.7 million metric tons (49.1 million bales) by July 31, down from 12.3 million tons a year earlier, the International Cotton Advisory Committee said yesterday. The decline will be the steepest since 2003, the Washington-based group said. Cotton fell 1.6 percent yesterday on signs that the harvest advanced last week in the U.S., the largest exporter. “It’s just a modest rebound from the shellacking cotton took yesterday,” said Rogers Varner, the president of broker Varner Bros. in Cleveland, Mississippi. Cotton futures for March delivery rose 0.31 cent, or 0.4 percent, to 73.79 cents a pound at 9:49 a.m. on ICE Futures U.S. in New York. Before today, the most-active contract climbed 50 percent this year, on expectations that global output would decline, eroding inventories. Production probably will slip 5.1 percent to 22.2 million tons from 23.4 million in the previous season, the group said. Consumption is forecast to rise 2.6 percent to 23.8 million tons as the global economy recovers from the deepest recession since World War II. To contact the reporter on this story: Catarina Saraiva in New York at asaraiva5@bloomberg.net.

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