December 12, 2012
The Australian cotton plant may be back on the previous two bale-bursters, but the general manager of commercial operations at Cotton Seed Distributors says it is still going to be a big year. Steve Ainsworth, who is based at Wee Waa with Australia’s largest cotton seed retailer, said the reduced forecasts put out by ABARES last week need to be analysed within the context of recent production. “We are coming off two record production years in a row, so even though this year is back somewhat, it is still a very big crop.” There has been a sharp contraction in cotton prices off record highs a year or so ago, but Mr Ainsworth said the reasons for the smaller planting were primarily agronomic rather than market-based. “It has been a dry start to the season, so there’s very little dryland cotton going in. “The area planted to irrigated cotton really hasn’t changed that much.” Mr Ainsworth’s comments were backed up by ABARES data. The latest Australian Crop Report suggested there would be a 26pc drop in cotton plantings, spearheaded by an 85pc drop in dryland cotton plantings, while there is only a 7pc decrease in the area sown to irrigated cotton. On the pricing front, Mr Ainsworth said near record prices for coarse grains, caused by the US drought that wreaked havoc with that country’s corn crop, had also swung the pendulum sorghum’s way. “There’s certainly a lot of interest in planting sorghum due to the good prices, and that has taken some acres away from cotton. “However, in some parts of the summer cropping belt, it hasn’t been possible to plant anything given current moisture levels, summer crop plantings as a whole are back. “I’ve been hearing that sorghum has been ordered by growers keen to get a crop in given the price, but they just haven’t had an opportunity given the lack of rain.” ABARES has total cotton plantings at 442,000 hectares, of which irrigation accounts for 419,000ha. Mr Ainsworth suspects the final number may be a little higher than that. “I think the figure may end up being around 490,000ha.” He said given there was good water availability, cotton still remained a solid earner, even at lower prices than in recent years. “Its not as good as in other years, but in many cases it is competitive with other options, especially if you have the access to infrastructure such as ginning facilities that you need. “Compared with something like corn, where the Australian market is quite small, and not that transparent, while corn returns are good, they might be more volatile, so people may prefer to stay with cotton.” “There are also people with long-term forward contracts, with prices locked in at higher values.” Mr Ainsworth estimated a crop of around a million tonnes of lint, or 4.4 million bales, compared to last year’s crop of 1.22mt or 5.4 million bales, compared to ABARES’s estimates of 945,000 tonnes of lint, or 4.16 million bales. ABARES estimates average yields will increase by around 7pc this year, due to a higher percentage of the crop being grown on irrigation, which is higher yielding.