A NEAR record cotton crop just shy of last year’s bin-busting records has given cotton growers something to smile about as they bring in this season’s harvest, especially as the market has softened to between $420 to $435 a bale.
Earlier in the season, Cotton Australia chief executive officer Adam Kay, Sydney, said prices were sitting at more than $500/bale.
Fortunately, a majority of growers had forward sold a portion of their crop when prices were up.
Namoi Cotton general manager of grower services and marketing Dave Lindsay, said the most significant influence on Australian cotton prices had been the rise of the Australian dollar.
He said Cotton prices had really dropped away.
Potentially though, Mr Lindsay said prices could spike to as high as $470 later in the picking season, depending on what the Australian dollar did.
Mr Lindsay said growers not in an immediate need of cash flow might be able to wait and capitalise on higher prices down the track.
Uncertainty over China’s plans to sell down its stockpile had also reduced local cotton prices.
Speculation persists that China will implement an auction system into their marketplace to sell down their stockpile.
Even with an auction system, Mr Lindsay said it wouldn’t be a quick fix for China’s huge stockpile as dumping a large amount of cotton into the market all at once would just crash prices across the board.
“The overall driver for the market will be a lower pricing regime,” he said.
“By keeping prices lower, China would be using more of their reserves.”
Mr Kay said this year’s Australian cotton crop was expected to average 11 bales/ha, which is just below last year’s all time high of 11.5 bales/ha.
“These are still the highest yields globally,” he said.
“Australian cotton yields are three times the world average.”
Mr Kay said this year’s crop is expected to produce 2.4 million bales with a total crop value of $1.3 billion predicted.
Gins have been running in the far north of the state for the past couple of weeks and Mr Lindsay said things would be ramping up in the central valleys in the coming weeks.
Southern NSW still hasn’t started picking, with most crops in the middle of defoliation now.
Mr Lindsay said quality had been good so far, with most areas experiencing ideal picking conditions.
Mr Kay said dryland crops had been a mixed bag this year, with a lot of growers running into hot conditions at the end of the season.
Despite limited in-crop rain, dryland crops were still averaging four bales/ha.
