May 2, 2012

Australia to harvest four million bales cotton this season

Due to good growing conditions and increased acreage encouraged by firm global prices, Australia will harvest a record 4.4-4.5 million bales this season, industry body Cotton Australia said on Tuesday (May 1).

"As an industry, we are about 40% complete with picking. We think the size of the crop is going to be around 4.4-4.5 million bales, breaking last year's record of 4.1 million bales," Adam Kay, chief executive officer of Cotton Australia said.

Kay said the record harvest has been driven by two factors - the availability of water and the strong price of cotton that acted as an incentive to switch crops.

Australia has experienced two consecutive wet summer seasons brought on by a La Nina weather system. The high level of rainfall has encouraged larger rain-driven cotton, grown without irrigation, which Kay said accounts for approximately 40% of the 2011-12 crop.

Virtually of Australia's cotton harvest will be exported, with 70% heading to China, Kay said. Global cotton prices have proved volatile in recent months.

New-crop December cotton futures on the ICE Futures US exchange traded at US$0.865 per pound on Tuesday, a near five-month low. News that India's, the world's second largest cotton exporter behind the US, is resuming cotton exports and heavy rain in the key growing area of Texas, which traders believe will see a bloat supplies, weighed.

Cotton hit a peak above US$1.07 per pound in June last year, just before the current Australian crop was planted. Despite the fall-back in cotton prices, Kay said he expects the record cotton crop to generate approximately AUD2.5 billion (US$2.6 billion) of export income.

In Australia, one bale equals 500 pounds. Bale weights vary in other cotton producing countries due to differing moisture content when cotton is compressed.