The latest USDA crop report forecasts Australia’s 2016/17 cotton crop will produce 4.5 million bales, up 1.65 million or 58 per cent from last year.

The harvested area is forecast at 550,000 hectares, up 76pc from last year, while the overall yield is predicted to be 1.781 tonnes/hectare, 16pc below the five-year average.

The report said yield was expected to decrease from last year because of a forecast increase in the share of the area sown to dryland cotton.

On average about 90pc of Australia’s total cotton production comes from irrigated areas.

This will be the first time in three years that a significant share of total cotton area has been planted to dryland cotton.

This season’s above-average rainfall increased water reserves for irrigated cotton and provided adequate soil moisture in dryland cotton areas.

Australia’s irrigated cotton area had increased, reflecting increased water storage levels in reservoirs supplying cotton growing regions.

Also, higher cotton prices relative to sorghum shifted sorghum area to cotton in Queensland and northern NSW where these crops compete.

The report said global cotton production had risen in 2016/17, while its use remained essentially unchanged, resulting in higher global ending stocks.

Global trade had also increased.

On February 24, the USDA released its first 2017/18 cotton projections which included a six-million-bale decline in global ending stocks.

However, all of the decline is expected to occur in China, as consumption continues to significantly exceed production while imports remain restricted, eliminating much of existing stockpiles.

Outside of China, forecasts for growth in use are more moderate, at just about 1 per cent, while production is expected to rise for another year.

Greater production in 2017/18 will largely be driven by higher area, while global yield is likely to decline slightly.

Area increases will result from favourable cotton prices around Northern Hemisphere planting times.

US cotton exports are projected to remain at their current elevated level of 13.2 million bales in 2017/18, due to expectations of large US exportable supplies.

Ending stocks are projected to rise slightly for a fourth year in a row, while the US share of trade is expected to be high for a second year in a row.

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2016/17 cotton trade outlook

Major Importers:

• India is raised 400,000 bales to 2.2 million on a continued strong pace of trade.
• Turkey is cut 350,000 bales to 3.25 million on poor demand conditions and spinning activity that remains lacklustre since July.
• Vietnam is boosted 200,000 bales to 5.4 million on strong recent trade, especially in the first half of February as the normal New Year’s slowdown in pace of trade did not materialize.
• Bangladesh is reduced 200,000 bales to 6.4 million on significant congestion problems in the port of Chittagong.
• Indonesia is increased 200,000 bales to 3.1 million on strong shipments from major suppliers, especially the United States.
• Brazil is up 100,000 bales to 200,000 on increased availability of duty-free import licenses.

Major Exporters:

• United States is hiked 500,000 bales to 13.2 million on high recent shipments and sales to all major markets.
• Uzbekistan is down 100,000 bales to 1.7 million on continued weak shipments to major markets.
• India is up 100,000 bales to 4.5 million on increased overland demand from Bangladesh, substituting for lost Chittagong shipping.
• Brazil is lowered 100,000 bales to 2.7 million on competitiveness vs. US cotton and declining available supplies.

Source: USDA