LATE season rain as the 2013-14 cotton crop was harvested led to quality downgrades, leaving growers and merchants disappointed.
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About 80 per cent of the Australian crop has been picked, with about 20pc already ginned.
The industry saw a dramatic drop for the season, producing just 3.8 million bales from the 414,000-hectare crop, down from 4.15 million bales in 2012-13.
Dry conditions led to a much lower dryland planting and low water storage levels led to some irrigated crops finishing early.
Yield levels have been good, averaging between 9.5 and 10 bales a hectare despite extremely hot summer conditions creating more field variability.
The late season rainfall saw the biggest downturn for the season, affecting the fibre quality.
"Some people were caught with open cotton in that rain but for some growers it was useful," said Cotton Australia CEO Adam Kay.
"There has been some downgrading in the colour of cotton that was open in the plant ready to pick when the rain came but the cotton picked before and after was of good quality."
Prospects for the 2014-15 season aren't looking much better, with many growers preparing to decrease their area by up to 50pc.
Early forecasts show an estimated 1.8 to 2.5 million bales being produced in the 2014-15 season.
With cotton at $500 a bale for the 2013-14 crop and $480/bale for next season, the only factor stopping growers planting is water allocation.
"There have been chances to price cotton for next season around the $500 per bale mark which is a good level," Mr Kay said.
"Growers normally forward sell what they know they're going to produce based on the amount of water they have, but if prices stay there and there's rain, much more cotton will be planted."
"At this stage, based on actual water in the system we're looking at about 218,000ha being planted," Mr Kay said.
"We're expecting with average rain that could increase to three million bales or more.
"Growers want to put more in but they can't until the water is in storage."
It's a huge difference from the industry's position at the end of the 2012-13 crop, when reliable water storage boosted grower confidence.
Northern NSW growing valleys are expected to be the hit hardest with very little storage in the main catchment dams.
"The Riverina will be the least affected next season because the storage levels are similar to where they were last year," Mr Kay said.
"Places like St George and Emerald that had good rain in February and March will be fine."