Cotton production in Australia; the world’s third-biggest exporter of the crop, is expected to fall by as much as 50% next season as drought slows the water supply, according to the crop growers.
The Crop output in 2014-2015 is expected to fall between 2 million and 2.5 million bales from approximately 4 million bales seen this year, according to cotton Australia. Production is forecasted to come in at 2.25 million bales, the Australian cotton Shippers Australian Cotton Shippers Association said.
Cotton futures declined by 24% this year and are the weakest in the Bloomberg Commodity Spot Index. Meanwhile, output in the US, the world’s largest exporter of the crop is expected to jump. Farmers in Australia are expected to reduce planting after a record drought in Queensland, according to Adam Kay, the Chief Executive of Cotton Australia.
Cotton slid to 62.02 cents on the ICE Futures US on Friday, marking the lowest since October 2009 before capping a 13th week of losses, the longest losing streak since 1959, according to Bloomberg.
“It’s been very dry out here, a lot of areas are dry,” Jonathan Burrell, a grower from Dirranbandi in southern Queensland, said in an interview today. While his cotton planting usually covers about 600 hectares (1,483 acres) a year, it will be about 126 hectares in 2014-2015, he said.
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“We’ve had very low water-flow levels over the last 12 months,” Burrell added, who’s president of the Dirranbandi Cotton Growers Association.
The Cotton harvest is expected to be the smallest since 2009-2010, when the output was lower than 2 million bales, according to figures from Cotton Australia.
A separate report from the Australian Bureau of Agrictultural and Resource Economics and Sciences, showed that Australia’s cotton exports may drop 11% to 870,000 metric tons in the year started July 1.
Harvest in the US is expected to advance 33% to 17.2 million bales of 480 pounds each in the year started Aug 1, according to Morgan Stanley estimates. Indian farmers are increasing production as much as 2.6% to 40 million bales of 170 kilograms each in the year starting Oct 1, according to B.K. Mishra, the chairman of Cotton Corp of India.
Reports from the US Department of Agriculture showed that the world inventories will rise to an all time high by next year, boosted by the record-reserves in china; the world biggest cotton user and importer.
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