Recovery edges closer for cotton, says ABARES

Assuming more favourable seasonal conditions for the cotton industry, ABARES forecasts a recovery in production in 2020-21.

Cotton prediction: ABARES predicts cotton production in 2022-23 to vary between 1.2 million bales in a dry scenario and 4.5 million bales in a wet scenario.

FOLLOWING one of the toughest seasons for cotton growers since 2007-08, the Australian Bureau of Agricultural and Resource Economics has predicted a recovery for the industry.

This month’s ABARES commodity outlook has forecast Australian cotton production to reach just 600,000 bales in 2019-20 after drought depleted water storages in NSW and Queensland. That is just 13 per cent of the production recorded in 2017-18.

About 60,000ha is expected to be planted to cotton, the lowest since the late 1970s.

But assuming more favourable seasonal conditions, ABARES forecasts Australian production to recover in 2020-21.

“Recovery is expected to be slow if favourable climate drivers, such as La Nina or negative Indian Ocean Dipole do not replenish storages,” the report said.

“This season, plantings and new field trials are under way in northern Australia, and these may result in expanded cotton production over the outlook period.”

Australian cotton exports are tipped to rise following recovery in domestic production.

ABARES indicated cotton production in 2022-23 would vary between 1.2 million bales in a dry scenario and 4.5 million bales in a wet scenario. The baseline scenario is for 3.8 million bales.

In the dry scenario, cotton production would remain low for the remainder of the projection period – resulting in 32 per cent lower production by 2024-25.

Meanwhile, the world cotton indicator is forecast to average US76.5c in 2019-20, down from US84.4c in 2018-19.

“Increased global production for cotton, high stock levels and competition from synthetic fibres such as polyester are expected to keep cotton prices near current levels in the short and medium term,” the report said.