AUSTRALIAN growers appear certain to sell out of 2022 cotton within weeks, a huge success for the industry considering this year’s crop is predicted to be a record 5.5 million bales (Mb).
Industry body, Cotton Australia, also believes growers are well positioned to market the 2023 crop despite global volatility.
Cotton marketing news service Cotton Compass is predicting 95 per cent of the 2022 crop is now sold and 36pc of the 2023 crop is forward sold.
Cotton Australia chief executive officer Adam Kay said these results are positive considering deteriorating consumer confidence amid rising interest rates and inflationary pressure, the impact of China’s COVID lockdown policy, and the war in the Ukraine.
He said there was still strong demand for local cotton and growers are expecting positive returns from the 2022 crop.
“Drought has reduced the US cotton crop by 4Mb and with Brazil stockpiles low, for the next few weeks and months Australia is the only source of quality cotton,” Mr Kay said.
“There is a silver lining to China’s soft ban in that it has assisted us to establish valuable new buyer relationships while enhancing existing customer relationships.
“Again this year we are getting good support from Vietnam, Indonesia, India, Bangladesh, Pakistan and Turkey.”
Louis Dreyfus Company vice president Joe Nicosia told the recent Australian Cotton Conference that Australia has a window of opportunity to sell cotton to the world, but the lower prices meant timing was critical.
“Our peaks are in their troughs so we will be able to fill the demand while US and Brazil cotton stocks are getting smaller, and India is also suffering due to flooding,” Mr Nicosia said.
“The most important decision is ‘when’ to sell, which has become a critical factor.”
Australian Cotton Shipper Association (ACSA) chair Roger Tomkins said there were challenges and opportunities ahead for Australian cotton.
“Prior to the price correction, we were positioned well,” Mr Tomkins said.
“Since then, demand has been drying up across all markets.
“We are still selling cotton, but the market has weakened.”
Mr Tomkins said there may be some pain in the short-term with some merchants facing defaults from buyers who paid high prices months ago, but he nominated Indonesia as a highlight.
“They’ve been a stable market for a long time and our share of the market has grown.
“The recent visit by a delegation of Australians, as part of the Agricultural Trade and Market Access Cooperation (ATMAC) funding initiative, helped cement the relationships so important in global trade.”
Export marketing consultant Rob Cairns led the delegation.
“Indonesia is Australia’s 13th biggest trading partner overall and second-biggest export market for Australian cotton,” Mr Cairns said.
“The feedback was that Australian cotton is well appreciated for its superior quality, sustainable growing practices and consistently high-quality, contamination-free fibre.”
Mr Cairns said that Indonesian consumption was currently around 2.4Mb, with many expecting that to increase to 3Mb soon.
“A bonus for us is that two of the largest spinning mills in Indonesia, both important clients for Australian cotton exports, have expanded their capacity recently and they prefer our cotton, so there are some positive signs.”
In the next six months, ACSA will work to create increased demand for Australian cotton through in-market visits to Vietnam, Thailand, India, Bangladesh and Turkey as well as a range of communication activities with brands and supply chain partners.
Source: Cotton Australia