Cotton price slump

Cotton Compass director Pete Johnson, Harlaxton, Queensland, said there was a surplus of cotton on global markets that was keeping the price about $400 a bale, down from $460/bale a couple of months ago.

“We probably need to wait for Europe’s crop to come back a bit to clear up the surplus,” Mr Johnson said.

A lack of decent rainfall since late March was probably even more of an issue for growers, he said.

“A reasonable amount of that (water in storages from the past rainfall) has been used to give the wheat a drink.”

Mr Johnson said the industry estimate for total planting area for NSW this season was 125,000 to 135,000 hectares of irrigated cotton, and 10,000ha to 12,000ha for dryland cotton.

The area for dryland cotton could increase with good rain.

If this estimate proved accurate, he said it would represent a large fall on last season’s planting area for NSW.

Recent forecasts from the Bureau of Meteorology that there was less chance of an El Nino event than previously thought were being watched closely by the industry, especially with the importance extra rain would have on the total planting area.

“It’s a bit more hopeful...(but) we’ll believe it when the rain is in the gauge,” he said.

Despite this, plenty of growers were remaining optimistic, he said.

“There are still plenty of people getting ready to plant.

“Even at $400/bale, that still gives probably the best growth margin ... and cotton prices typically range quite a bit during the season.”

The low current price could also lead to a surge in demand for cotton, he said.

Mr Johnson said newer cotton areas such as Murrumbidgee and Riverina were still well placed, especially with two new cotton gins on the way for the area.

“That region is coming up the capacity to expand the industry,” he said.

Namoi Cotton trader Pedr Harvey agreed NSW was looking at a “considerable” fall in cotton planting area this season.

Mr Harvey also estimated there would be about 125,000ha of irrigated and about 12,000ha of dryland cotton planted.

This would equate to about 40,000 bales of dryland cotton and about 1.25 million bales from the irrigated crops, he said.

Mr Harvey said areas such as Walgett, Bourke and Mungindi were the regions looking at the biggest drop in cotton planting this season, with lack of rain being a major cause.

Southern Cotton general manager Kate O’Callaghan, which runs one of the existing gins in the south at Whitton, agreed cotton was set to expand in the area.

Ms O’Callaghan said growers were still interested in the benefits of cotton as a summer crop, such as high return per megalitre of water, cottonseed and cotton lint commodity prices giving growers great returns and growers having the ability to forward market.

Ms O’Callaghan said she expected more growers to consider producing cotton with technology and education underpinning increased demand for it as an alternative crop.

Southern Cotton set a new ginning price of $65 to $70 a bale last week, which Ms O’Callaghan hoped would attract new growers as well as help existing ones.

“The new price structure recognises the commitment our growers have shown us as we’ve grown the business from the ground up, and looked for ways to attract new growers to the industry,” she said.

“We plan to work closely with each grower to develop their business model.”

CURRENT low cotton prices are not holding Dallas Stott back from planting another crop near Whitton.

Mr Scott’s “Farm 1710” paddocks once grew rice, but now coming up on his fifth cotton season, he isn’t looking back despite a price of about $400 a bale for cotton at the moment.

“It (the lower price) might not entice too many new growers, but it always goes down at this time of year.”

Mr Stott (pictured) said he expected the price to not stay down for too long.

“I’m fairly confident it wouldn’t go too much lower before it goes up again.”

This left him confident to start preparing his paddocks for planting.

“I might plant a little more this year – it depends on the water availability though.”