Cotton crop losses from flooding and heavy rainfall in Australia, the fourth-largest exporter, may increase if wet weather continues, Australian Cotton Shippers Association Chairman Arthur Spellson said.

"We have probably already lost about 300,000 bales but that could go up, it just depends on what happens with the weather from here on in," Spellson said by phone today. The Brisbane-based group had been forecasting record output of more than 4 million bales, he said.

Queensland state has been inundated for more than two weeks after downpours lashed northeastern Australia, flooding coal mines and farmland. Crop damage on the Darling Downs, where heavy rain caused flash flooding yesterday, remained unclear, Spellson said.

"The ability of cotton to recover is going to be determined by whether it gets a lot of good, hot, sunny weather from now, and it's obviously not getting that at the moment," he said. The crop is mostly harvested from about March to May.

Cotton for March delivery on ICE Futures U.S. in New York gained 0.8 percent to $1.4440 a pound at 2:29 p.m. Melbourne time. The contract reached a record $1.5912 on Dec. 21.

Australian production is still forecast to rebound to an all-time high after years of drought as above-average rainfall in 2010 boosted irrigation dams and soil-moisture levels, while rising prices encouraged planting.

Rabobank Groep NV yesterday cut its forecast by 8 percent to 3.95 million bales, still a record level, it said in a report. Queensland's output may have been cut by 500,000 bales, or by about 65,000 hectares (160,618 acres), it said.

Eoin Treacy's view The last 12 months have set records in terms of extreme weather which has had a corresponding effect on agriculture prices. Cotton has been one of the better performers, soaring to new nominal highs and breaking a 35-year inflation adjusted downtrend.

Prices fell sharply in November, found support near 110¢, soared to a new high near 160¢ and pulled back to 140¢. It has rallied from that level over the last two days but will need to sustain a move above 150¢ to check current scope for some additional consolidation of recent gains. Weather remains a powerful influence on prices and if the Australian floods continue to pose a threat to yields there is potential for prices to move higher.