Australia, the world's third largest cotton exporter, could produce a record crop for the second straight year in 2011/12 as high global prices and ample water supplies encourage crop planting, National Australia Bank (NAB) said on Friday.
The bank said the country's cotton industry could produce 4.8 million bales in 2011/12, assuming normal yields following a just harvested record 4 million tonnes in 2010/11. "High prices and strong supplies of irrigation water are likely to induce increased plantings of irrigated cotton," NAB said in a commodities report.
The bank's estimate is in line with a forecast made by the government's chief commodities forecaster in June. "The outlook is still positive, as NAB expects there is enough support in the cotton market to keep prices around $1.00 cents per lb on average through the second half of 2011," said Khan Horne, general manager, NAB Agribusiness.
The key December cotton futures on ICE Futures US fell 1.04 cents to finish at $1.0257 per lb on Thursday. Cotton prices rallied to a peak of $2.27 per lb in the first quarter of the year, as tight supplies and robust demand, especially from top consumer China, fuelled the charge.
Cotton growers are now preparing fields for planting of the new crop in October. The US Department of Agriculture (USDA) has estimated global cotton production could increase 7.5 percent in 2011/12 as relatively high returns have seen a massive increase in global acreage.
Still, the USDA forecast the 2011/12 world stocks-to-use ratio to be the third lowest level since 1994-95. US cotton futures settled lower Thursday on profit-taking and investor sales as traders kept an eye on the unresolved US debt crisis, ending a brief surge over the previous two sessions.
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