Jan. 4 (Bloomberg) -- Flooding in Australia, the fourth-largest cotton exporter, may threaten more crops in Queensland state as rivers continue to swell and with further rain forecast for growing regions.
The Balonne River is at risk of flooding crops at St George as damage is assessed around Theodore and Emerald, where waters are receding, Sydney-based Cotton Australia spokesman David Bone said. The floodwaters at St George, where cotton crops were inundated in March, may peak next week, according to the Bureau of Meteorology.
Cotton futures surged to an all-time high last month on speculation that global demand led by China will outpace supply. Heavy rainfall may curb yield potential in Queensland state after Cotton Australia said Dec. 8 that national output this year may reach a record 4.2 million bales from 665,000 hectares (1.6 million acres).
“It’s still a big crop but it hasn’t had the sun and heat units to really get the yields and quality that everyone was expecting,” David Watson, senior advisor, markets at FCStone Australia Pty, said by phone from Sydney. Production estimates could be cut by about 200,000 bales by the wet weather, he said.
Cotton for March delivery gained as much as 1 percent to $1.4366 a pound and was at $1.42 by 6:33 p.m. Melbourne time after last year posting the biggest annual gain since 1973.
Planting of the Australian crop was completed last month and harvesting will be from March to May.
PrimeAg Australia Ltd., a producer, estimated about 2,000 hectares, or 13 percent, of its 15,200 hectare cotton crop had been inundated.
“It will be at least a week before damage levels become clear,” PrimeAg Executive Chairman Peter Corish said in a statement today to the Australian stock exchange. Some area would be lost, while others may recover if plants were flooded for less than two to three days, he said.
The company’s farms at Goondiwindi, Moree and Gunnedah had avoided any flooding and growing conditions for the summer crops had been favorable, it said.
Cotton Australia’s Bone left unchanged an estimate that 7,500 hectares had been destroyed, while the yield impact was unclear.
PrimeAg, based in Toowoomba, Queensland, fell 3.5 percent to A$1.38, the lowest since Oct. 19, at the 4:10 p.m. Sydney-time close on the Australian Stock Exchange.
Parts of the cotton-growing region in northern New South Wales and Queensland may receive up to 50 millimeters (2 inches) of rain in the eight days ending Jan. 11, according to the Bureau of Meteorology. The Balonne River at St George, located about 500 kilometers (310 miles) inland from Brisbane, may peak at more than 14 meters (46 feet) on Jan. 10 to Jan. 11, which would be higher than flood levels in March, it said.
Yields on about 11,000 hectares in the St George and Dirranbandi regions were threatened last March by flooding and plants standing in water, according to Cotton Australia estimates that month.
National cotton area may be 557,000 hectares this season, the Australian Bureau of Agricultural and Resource Economics and Sciences said in a report Dec. 7., up from 208,000 hectares a year earlier. Queensland was forecast to account for 41 percent of the area.
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