Cotton’s bounce to $530/bale

As the cotton season moves closer to processing, growers are looking to lock in their cotton as the market steadies with offers between $520 and $530 a bale.

These prices are well ahead of this time last year when cotton was fetching from $480 to $500 a bale.

With the cash price at nearly $500 for next season, growers who have water to produce the 2014-15 crop are also forward selling.

However, plenty of uncommitted crop remains to be sold this season, with some growers seeking to lock in the balance at the current price.

Namoi Cotton marketing and grower services general manager Dave Lindsay said most growers had forward sold 75 per cent of their crops.

The option to lock in a price for the remainder will give growers who sold early the chance to lift their average price.

Meanwhile, an upside in prices was expected if the dollar fell below US90 cents, but at its current level was doing little to bolster grower returns.

“If it went from US90 cents to US85 cents, trading five cents lower, that would add $30 a bale to the cash price,” said Cotton Australia chief executive Adam Kay.

“That’s a big difference for our growers.”

While China is the world’s largest cotton producer, it still has huge demand for quality Australian cotton.

“China is also the largest cotton user – they use more than they produce,” Mr Kay said.

“Even if China has a good crop, it still needs to satisfy the demand from spinning mills.”

The Australian crop is expected to produce 3.9 million bales, valued at about $2 billion – a drop from last year’s 4.2m bale crop.

Of the 430,000 hectares planted, 410,000ha will be picked.

“We planted a similar area to last year, but those crops didn’t run out of water like they did this year,” Mr Kay said.

“In Central Queensland, 95 per cent of the crop has been picked and ginned, while further south, at Theodore, 50pc of the crop has been picked.”

Picking has begun at St George and Dirranbandi, along with some of

the early crops on the Darling Downs.

Dryland picking has begun in the northern valleys, with irrigated crops which had water troubles expected to be picked in the next week.

Fully-irrigated crops in the Macquarie, Namoi, Border Rivers, MacIntyre and Gwydir valleys will start defoliation in the next week and crops in the Riverina and Lachlan valleys are another month away from defoliation.

Harvest will come into full swing by mid-April for the northern valleys, with the southern areas expected to start in late April.

“They’ve had good yields in Queensland of 10-plus bales a hectare which is quite exciting because they had a couple of tough seasons,” Mr Kay said.

Growers in the north used much more water on their crops than expected and changed irrigations to cope with the heat.

More water was used at the start of the season to ensure adequate plant establishment and growth, according to B. and W. Rural Mungindi agronomist Michael Brosnan.

“We chewed up water just trying to keep the plant cool and we’ve had no help from Mother Nature at all,” Mr Brosnan said.

In comparison, less than five per cent of the Namoi crop was significantly short of water.

Some growers chose to reduce the hectares planted in anticipation of a severely dry, warm season, Mr Brosnan said.

“We probably would have chanced it more, if the price had have been $550 per bale or more, but we cut our acres back and thank goodness we did,” he said.

“We thought we were being ultra conservative, but we only just made it through.”

Mungindi grower Geoff Brownlie started the cotton season with 170ha, but he’ll end it with just 100.

When planting at “Ridgeview”, Mr Brownlie pre-irrigated his plants using 1.5 megalitres of water a hectare.

By the time his first irrigation was scheduled in late November, Mr Brownlie had doubts he would have had enough water to finish the season and made the decision to sacrifice 70ha.

With his first defoliation last week, Mr Brownlie said he was pleased with his decision to forgo 70ha to focus the water on the better fields.