February 7, 2012

Australian cotton farms receive more damage from floods

Australia's cotton farmers are preparing for more rain, possibly extending the flooding which may damage up to 10% of the crop, aside from sugar cane, soy and sorghum.

Eastern Australia which is in some areas suffering worse flooding than in the inundations which followed storms including Cyclone Yasi a year ago, is expected to receive another 25mm-50mm of rain later this week, Australia & New Zealand Bank said.

The rains threaten to extend the period of inundation which is a key factor in determining damage.

"The speed at which the water subsides and how quickly soils stay waterlogged will be key in determining any impact on yields," ANZ analyst Paul Deane said.

The New South Wales government estimated on Monday that 570,000 hectares of land is flooded in north central and north western areas, with "widespread" inundation causing "extensive damage to agriculture industries, including sugar cane and soybean crops" on the north coast.

However, for cotton, concerns have centred on area around Moree, at the centre of the important Gwydir Valley cotton growing region, suffering its worst floods in 35 years, after rains upstream described as dumping in two days the normal rainfall of two months.

The area's nine gins produced more than 700,000 bales of cotton last season - well over 15% of national output.

Crop trader Olam International has warned that 10% of Australia's crop could be damaged by the floods.

On cotton markets "prices are finding support amid fears of shortfalls in Australia brought about by heavy rainfall and flooding, since this could dash hopes of a record harvest in this key cotton export country", Commerzbank analysts said.

But the rebound in New York cotton futures - also attributed to better hopes for demand fostered by a better outlook for the world economic recovery and to forecast of a 10% cut in China's cotton sowings fizzled out in late deals.