With few remnants of 2021's cotton crop left in paddocks, growers' minds are turning to next year's crop, and the production outlook could hardly be more positive.
Current cash prices are also helping growers turn higher than expected 2021 yields into great returns.
But can they hold and help 2022's excellent production outlook generate another year of strong returns, or will there be "catches in cotton?"
As August opens, all cotton-growing regions in NSW and southern Queensland have at least average soil moisture and most have above-average to very much above-average soil moisture for this time of the year.
Additionally, the Bureau of Meteorology is forecasting a 70 per cent chance of above-average rainfall across all cotton-growing regions of Australia between now and November.
These dynamics support a substantial increase in dryland planting, as well as expanded irrigated cotton programs, which will also benefit from improved Murray Darling Basin water storage capacity - now above 70 per cent and increasing by the day - with allocations being increased and carry-over water available from last year.
Early forecasts of planted area for 2022/21 cotton all point to a sizeable increase - anywhere up from 49 per cent to more than 80 per cent year-on-year.
The high end of these forecasts would bring planted hectares in at near to Australia's fourth-largest cotton planting on record and a welcome second year of improvement after 2019/20, which was the second-lowest planted area in 40 years.
But it's just not just prospects of a great growing season that will incentivise this year's expansion.
Current sales are typically exceeding Australian $600 a bale and 2022 pricing near to A$600/bale is on offer.
Global dynamics are supportive of cotton prices remaining strong over the second half of 2021.
Demand is expected to remain strong so - together with US and Brazilian stocks diminished after heavily frontloaded export programs this year - we're expecting Intercontinental Exchange number two cotton to remain above US85 cents a pound out to the end of this year and to continue to test the US90c/lb level.
Our expectation that the Australian dollar will soften towards US72c over the balance of this year sees this translating to prices above A$600 a bale for much of this period.
As new exportable stocks from the US become available towards the end of the year, cotton prices are likely to step down into 2022 and remain there for the balance of the Australian season.
Currently, good crop prospects in India, as well as improved Australian supply that can be expected to come on board in 2022, will also deliver some downward pressure.
That expected price step down is however only to US80c/lb, with persistent strong demand and lower supply from Brazil (where high corn prices mean a fight for cotton acres) the key elements keeping the market tight into 2022.
At US80c/lb - 10 per cent above the five-year average - along with expectations for the Australian dollar to be in the range of US73-74c into quarter three of 2022, we see Australian cash prices trading around A$580/bale in 2022.
So a bit of a catch in cotton's price outlook, but the real challenge might be getting cotton planted in wet conditions, and then ensuring the sun shines over the growing season.