Australia, one of the world's leading cotton exporters, has started to reap what is expected to be a record crop, an industry spokesman said on Friday, but yields are set to be hit by floods in some areas and dry conditions in others.
Harvesting of the July-June year Australian crop has kicked off in northern Queensland state on Australia's east coast and will move south to end around June. Cotton Australia spokesman David Bone said Australia expected a record crop of around 3.7 million bales, beating a previous record of 3.5 bales in 2001/2002.
"A combination of high prices and water available encouraged farmers to plant a record area although we have had some setbacks including floods in December and January in Queensland and northern New South Wales," said Bone. Early forecasts had been for a crop over 4 million bales but flooding caused estimates to be trimmed. Around 4.4 bales equal 1 tonne of cotton. Malcolm Bartholomaeus, a market analyst for Callum Downs Commodity News, said conditions had deteriorated in New South Wales where much of the dryland cotton had been planted after good rains last year.
"It has been a dry summer in northern New South Wales so the expected yields are not going to be there," said Bartholomaeus Cotton prices have been underpinned by China's insatiable appetite for the fibre as demand rises domestically and imports are showing signs of recovery in other countries.
US cotton export sales surged three-fold to 545,000 bales in the week ending March 17, including 331,000 bales of old-crop supplies, indicating that demand for global cotton remains strong, even when prices are soaring. Luke Mathews, a commodity specialist with the Commonwealth Wealth Bank of Australia, said it was the strongest weekly sales result since November last year.
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