May 14 (Bloomberg) -- Cotton futures rose, snapping a two- day decline, on speculation that demand from textile mills will rebound as the global economy recovers. Orange juice dropped.

World consumption will rise 3.1 percent to 113.5 million bales in the year starting Aug. 1, the U.S. Department of Agriculture said this week. The Standard & Poor’s 500 Index resumed a rally, after posting the steepest nine-week gain since the 1930s in the period ended May 9. Cotton has jumped 37 percent since the end of February as global production declines.

“Demand should be steady or even increase going forward,” Jarral Neeper, president of Calcot Ltd. in Bakersfield, California, said today on a conference call organized by the Ag Market Network. “Mills are still struggling a bit economically, but for the most part, the worst is over.”

Cotton futures for July delivery rose 0.02 cent to 58.6 cents a pound on ICE Futures U.S. in New York. Prices dropped 2.5 percent in the previous two days after reaching 61.67 cents on May 12, the highest for a most-active contract since Sept. 25.

Cotton may reach 68 cents by November as mills are “scrambling to secure supplies,” Neeper said. While prices may drop as low as 52 cents between now and November, the general trend is up, he said.

Export Sales

Earlier, futures touched 58.05, the lowest in five sessions, following a report that showed a slump in export sales last week after prices soared. The U.S., the world’s largest cotton exporter, sold 55,753 running bales to overseas buyers in the week ended May 7, less than half the amount sold a week earlier, the Department of Agriculture said. A bale of cotton weighs 480 pounds, or 218 kilograms.

“We now have priced ourselves out of the export market,” Mike Stevens, an analyst at Swiss Financial Services in Mandeville, Louisiana, said on the Ag Market call. U.S. cotton was the cheapest in the world about 10 weeks ago, he said.

On ICE, orange-juice futures for July delivery fell 0.2 cent, or 0.2 percent, to 93.1 cents a pound. The commodity is up 37 percent for the year.

To contact the reporter on this story: Yi Tian in New York at ytian8@bloomberg.net.

Last Updated: May 14, 2009 15:56 EDT