Cotton Output in Australia May Challenge Record on Prices, Heavy Rainfall

Cotton production in Australia, the fourth-largest exporter, may jump to a record this season as prices gain to a 15-year high and above-average rain boosts planting, according to a producers group.

“There is certainly that sort of potential to challenge the record crop,” Cotton Australia Chief Executive Officer Adam Kay said. Production could be more than 3.5 million bales, depending on growing conditions and as planting gains, he said. Output reached a record 819,000 metric tons (3.6 million bales of 227 kilograms) in 2000-2001, government data show.

Rising cotton prices are forecast to drive a 16 percent increase in global production this year, the International Cotton Advisory Committee said Oct. 1. New York futures reached a 15-year high today and surged 70 percent in the past 12 months on concern that there will be supply shortages.

“We are into planting now and there is a lot of cotton in the ground,” Kay said by phone from Sydney. “There are still some people partway, and some to start, because they are in areas where it has been a little bit too wet,” he said.

December-delivery cotton advanced as much as 2.8 percent to $1.1394 a pound, the highest price since June 1995, before trading at $1.1371 at 5:03 p.m. Melbourne time on ICE Futures U.S. in New York.

Farmers have planted about half an expected area of 400,000 hectares (988,400 acres) to 450,000 hectares, with about three- quarters of the crop likely to be on irrigated land, Kay said. The crop will be mostly harvested from March to May.

Still Growing

“The area is probably still growing as these prices encourage more and more people into the fray,” he said.

Output is rebounding from 1.7 million bales last harvest and a 30-year low of around 500,000 bales in 2007-2008 when drought cut production, according to industry figures.

Water storages in the Murray Darling Basin, where more than 90 percent of Australia’s cotton is grown, were 68 percent full as of yesterday, according to the basin management authority’s website, compared with 39 percent on Aug. 4.

Australia had its wettest September on record. A La Nina event, characterized by a cooling of Pacific sea temperatures, brought above-normal rainfall to the country’s eastern and northern regions, according to the Bureau of Meteorology.

“There are some growers concerned, they don’t want it to get too wet because they want to get their cotton in, but it is not a big problem,” Kay said. There was still plenty of time for planting, he said.

The previous record crop was produced on an area of more than 500,000 hectares, with this year’s forecast output reflecting improvements over the past decade in yields and water-use efficiency, Kay said.

The Australian Bureau of Agricultural and Resource Economics-Bureau of Rural Sciences, based in Canberra, forecast 2010-2011 output at 653,000 tons (2.9 million bales of 227- kilograms each) in its Sept. 14 report.

To contact the reporter on this story: Wendy Pugh in Melbourne wpugh@bloomberg.net.

To contact the editor responsible for this story: Richard Dobson at Rdobson4@bloomberg.net

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