Picking cotton in the St George-Dirranbandi district of south-west Qld. Photo: LAWD

A NEW report suggests Australia’s cotton sector is increasingly being read through a property lens, with farmland values, investor sentiment and the premium attached to secure irrigation now central to the market outlook.

In the latest Month in Review, Herron Todd White southern Queensland valuer Bart Bowen said growers, investors and rural property buyers are weighing rising input costs, dry seasonal conditions and global uncertainty against the long-term attraction of productive cotton country and well-developed irrigation assets.

“Geopolitical instability in the Middle East, particularly concerns surrounding trade through the Strait of Hormuz, has added pressure to diesel and fertiliser markets by increasing operating costs for growers across key production regions,” Mr Bowen said.

While availability of key inputs diesel and urea across the Darling Downs and Central Qld remains relatively sound, Mr Bowen said higher prices and variable seasonal conditions are reshaping planting decisions.

“That is tightening the gap between secondary and premium country, with buyers more selective about water security, development and the ability of a holding to maintain returns through volatile seasons.”

“Premium assets are holding value more effectively than secondary country, as growth moderates after more than a decade of gains.”

Mr Bowen said dry conditions in parts of southern Qld, central Queensland and New South Wales are impacting confidence and cash flow, while parts of northern Australia have experienced extended wet conditions that have complicated harvesting and reduced yield potential.

According to ABARES, the gross value of Australian agricultural production is forecast at $94.7 billion in 2025-26, while official cotton outlooks point to lower production and value as reduced water availability weighs on plantings in some key
regions.

Cotton Australia continues to predict a crop of around 4.4 million bales nationally, although final yields will depend heavily on seasonal conditions through the remainder of the harvest period.

As the industry moves through the remainder of 2026, Mr Bowen said water availability, input pricing, financing conditions and geopolitical risk will remain critical to both production decisions and rural property pricing, with farmland values expected to stay firm for premium.

Following is a summary by cotton-growing region:

Qld and northern NSW

Mr Bowen reports the market for irrigated cropping country remains relatively tightly held, particularly across premium Darling Downs locations where demand from family farming enterprises remains solid.

“Permanent irrigation assets continue to command strong pricing, supported by water security concerns, federal water buyback programs and the long-term productivity of highly developed farming country.”

Mr Bowen said dry conditions across parts of southern Qld and the Moree Plains have softened sentiment in some secondary markets.

“This hasn’t necessarily triggered a broad correction, but it has created a more obvious split between top-tier holdings and assets that depend more heavily on seasonal upside.”

Mr Bowen said corporate ownership is also shifting.

“Across several regions, larger agricultural aggregations are increasingly being broken apart for sale, with some market participants citing Queensland’s tax settings and broader operating costs as factors influencing divestment decisions.”

Equally, he said, there is strong appetite for smaller, high-performing parcels that offer scale, water and immediate operating capacity.

Central NSW

Mr Bowen said dry conditions continue to dominate sentiment.

“Limited rainfall has impacted grazing operations and irrigation confidence, while water storage levels remain a key concern ahead of future planting seasons.”

“Cotton harvesting in the Macquarie Valley is under way, with early reports indicating average to above-average yields despite challenging conditions.”

Southern NSW

Mr Bowen said southern New South Wales is facing water-related pressures.

“In some areas, temporary irrigation water prices have climbed above $400/ML, significantly impacting the economics of cotton production, with some irrigators reducing summer planting intentions altogether.”

At the same time, Mr Bowen said elevated fertiliser prices are encouraging many growers to shift portions of their winter-cropping programs away from cereals and toward legumes.

Northern Territory

Mr Bowen said the NT’s emerging cotton industry remains firmly in a development phase.

“Now entering its sixth commercial season, growers across the Douglas Daly and Katherine regions continue to experiment with different cotton varieties, irrigation models and soil management techniques in an effort to adapt to the highly variable tropical climate.”

While there have been encouraging signs of success in some areas, Mr Bowen said recent extended wet conditions and concerns surrounding large-scale dryland developments have tempered confidence across parts of the market.

Ord River Irrigation Area, Western Australia

Mr Bowen said the ORIA is continuing to gain momentum as one of Australia’s most promising emerging cotton regions.

“Significant infrastructure investment, including the completion of a new cotton gin near Kununurra and upgrades to the Port of Wyndham, is strengthening the long-term viability of the region’s irrigated cotton industry.”

“Strong recent sales activity for irrigated farming country across the Ord reflects growing confidence in the area’s production capability, secure water access and export potential,” he explained.