Cotton growers plant huge crop, capitalise on record prices

Global demand for cotton is setting the local industry alight. See the eye watering prices growers are getting.

Cotton growers are benefiting from record prices just as they complete plantings in NSW and Queensland.

Good timely rain in the dryland cropping regions of southeast Queensland and northwest NSW in the past couple of days have given optimism the nation’s growers will plant more than 470,000 hectares of cotton, well higher than last year’s area of 271,000ha.

Cotton Australia chief executive Adam Kay said that could see a crop of 4.6 million bales or higher being harvested next year, making it potentially the second biggest production on record in Australia.

The previous record cotton crop of 5.3 million bales was produced in 2013.

Source: Included

Mr Kay said a 4.6 million bale crop would place Australia as the fifth biggest producer in the world behind India, China, the US and Brazil.

Futures prices on the international market have hovered about or just below the 116 US cents a pound (A$784 a bale) mark for the past few months.

But they are a long way from the record prices of about 205 US cents a pound ($A1000 a bale) set in February, 2011.

ADM Trading Australia cotton manager Arthur Spellson said 2011 was a spike, but no country had cotton to capitalise on prices at the time.

He said local prices were sitting at about A$700 a bale after reaching $715 about two weeks ago.

“This would definitely be a record for prices in Australia,” he said.

“I think most of the cotton irrigators would have 50 per cent of their crop sold.

“This has been good for growers.”

Mr Spellson said the high prices were driven by tight global supplies of cotton.

He said this season’s US cotton crop was of a reasonable size but harvested late and the Brazilian crop was also late.

“And there are rumours the Chinese and Indian crops might have issues,” he said.

“There is not a lot of cotton available in the market.

“A lot of buyers have got inventories down to critically low levels and they need cotton.

“There is very strong demand as some countries bounce back from Covid.”

Mr Spellson said shipping cotton out of Australia has been a problem in recent months as global supply chain issues take hold.

Cotton growers are set to capitalise on record prices for next year’s crop.

But the industry was able to export 550,000 bales out of the country during September.

“That’s a very good result,” he said.

“Hopefully, we’ve seen the worst of it now.

“But we need to be shipping out 550,000 to 600,000 bales out every month next year before the price drops.”

China banned imports of Australian cotton in October last year but the political decision failed to dent the local market.

Australian Cotton Shippers Association chairman Michael O’Rielley said Australia has all but sold out of this year’s crop.

Mr O’Rielley said Vietnam was now Australia’s biggest cotton market, followed by Indonesia, with Thailand, Bangladesh and India all key markets.

Mr Kay said a 4.6 million bale harvest would produce one million tonnes of fibre, enough to provide clothes for 500 million people.

“Cotton is still the world’s No. 1 natural fibre and it’s in demand,” he said.

“People want to be clothed.

“And 4.6 million bale crop will produce 1.2 million tonnes of cotton seed, which is a valuable by-product for feeding livestock or converting into oil.”