Australian cotton growers are forecast to produce the second-biggest crop on record this season, with an export value tipped to reach an eye-watering $3.5 billion at current prices.
Cotton Australia general manager Michael Murray said it will be a good result for the industry.
"We think it's going to be somewhere between 5 million and 5.2 million bales, so that'll make it the second-largest crop on record," Mr Murray said.
Branching out to new markets
Mr Murray said the export value was set to eclipse the previous record of $3 billion set in the 2011–12 season, when Australian growers produced more than 5 million bales.
The predicted record-breaking value is the result of favourable seasonal conditions returning to many drought-affected production areas, and strong global prices equating to about $840 a bale.
"Price is very strong, not technically at record levels, but it has been consistently strong for some time now," Mr Murray said.
This was despite a breakdown in trade relations with China.
Cotton analyst Pete Johnson said cotton marketers had successfully redirected exports to other markets after the Australian cotton industry was pulled into the fray of Chinese trade tensions in 2020, and exports to the key market effectively ceased.
"It's actually a really good thing. We're seeing Australian cotton now going to much more diversified destinations so we're less beholden to one market."
COVID bottlenecks drive prices
COVID-related disruptions to supply chains have driven global prices to near-record prices this season.
Mr Johnson said as much as 5 to 10 per cent of the global cotton supply is caught up in logistic bottlenecks.
"The cotton is there but it's not arriving at spinning mills, so they end up buying more than they need to compensate for that fact that there's so much stuck in transit," he said.
Stuart Armitage, who farms at Cecil Plains in southern Queensland, said widespread flooding had created some problems earlier in the season, but the crop was now growing well.
He said local growers were optimistic and capitalising on high prices by locking in big supply contracts, though he was cautious about predictions for the rest of the season.
While the pandemic was driving high cotton prices, Mr Armitage said it also created extra production costs.
"We're living in interesting times with everything we do. Machinery is hard to get, fertiliser is hard to get," he said.
Mr Johnson said it was anyone's guess where the market would end up by harvest.
"It feels like the market is overdone at these levels, but it keeps marching higher every day," he said.
