Skyrocketing cottonseed prices head towards drought levels

Eric Barker, August 9, 2023

A COMBINATION of dry weather starting to set in and increased exports has been attributed to cottonseed prices heading towards similar levels to the 2019 drought

Some producers have told Beef Central they are struggling to source the product and have had to pay more than $600 per tonne.

RainAg director Ian Grellman said cottonseed was tightly held and price discovery was tough.

However, he said with the Bureau of Meteorology forecasting a hot and dry summer, and with a potential El Niño, plenty of livestock producers had been inquiring about cottonseed.

“A lot of people get pretty gunshy and they start hedging by purchasing cottonseed,” Mr Grellman said.

“Parts of New South Wales and Queensland are still pretty dry so people in those areas are holding on to their purchases.”

“If the conditions change and we get a decent bit of rain, then I think the prices will see the market come off a bit.

“We are seeing the same thing in the grain market; we have just started bringing grain around to the eastern states from Western Australia with the concept that it could stay dry.”

Mr Grellman said a lot of the cottonseed had also been heading to China on forward contracts.

“The Chinese are a major part of the market now and there has still been quite a few container exports direct to China; that puts a bit of pressure on the market when China is constantly buying.”

“Current prices are probably too high for the Chinese market, but a lot of it was sold three or four months ago and the packers don’t want to back out of sales.

“It is what is left on their trading book (that) is what they are trying to make that extra bit of money out of.”

Mr Grellman said the cotton industry’s move to improve lint yields in recent decades has come at the expense of cottonseed.

“A lot of people don’t realise that the increased lint yield impacts the yield of seed.

“When I first started trading cottonseed, we were getting yields of 330kg of seed every bale.

“Now we are actually producing less seed than we used to in a bale of cotton and that has affected the market overtime.

“People might think we have a big crop in, but it doesn’t necessarily produce as much seed as it used to because the growers are chasing yield of lint.”

Hedging for drought

Longreach-based livestock nutrition consultant Désirée Jackson said winter rain in her area had caused damage to existing dry standing grass pasture, despite the emergence of some nutritious forbs.

“For those with primarily grass-based pastures, this has increased their requirement for energy supplements for animals with high nutrient requirements such as ewes and heifers in late pregnancy or early lactation.” Ms Jackson said.

“This has noticeably pushed up demand for cottonseed.”

Desiree Jackson

Ms Jackson said finding it was tough and most of her clients were paying more than $600/t.

“I had one client ring me up to say he managed to get a spot sale on cottonseed for a lot cheaper than other available supplies, but this was just a once off.

“Sometimes you can get those spot sales if you are persistent and keep your options open, and look to a number of suppliers for a particular commodity.”

While she had seen some have had luck with spot sales, Ms Jackson said it was important to develop relationships with suppliers where they can get guaranteed ongoing supply, such as fortified molasses.

“It is really important for people to make plans now, ask their suppliers about their current supplies and how they will manage customer demand when supplies get low.”

“Many suppliers naturally show reciprocal loyalty to loyal customers.”

Navigating supply issues

Ms Jackson said major shortages of supplements had caused issues in the past.

“When there was a molasses shortage a few years ago some clients with pretty big operations were told ‘this is your last shipment’ without any notice.

“It is difficult to procure large quantities of appropriate commodities at short notice.

“There is also the risk to the animal when there are rapid transitions from one energy commodity to another.”

Ms Jackson said cottonseed was still a good option for producers who needed it. However, she said good forward planning was needed to optimise its use.

“Cottonseed is so good because it is safe, highly nutritious, and easy to feed to livestock without risk of complications, unless of course, there is insufficient pasture available.

“I encourage producers who have sustained significant pasture damage through spoiling rain or frosts to make sure they have enough energy supplements where required, or to put a contingency plan together about offloading animals.

“Diet quality testing is also important, particularly for people who have some winter herbage around in response to rain that damaged grass in the process.

“This will assist in determining where diet quality is at in relation to animal nutrient requirements and what nutritional management decisions need to be made.”


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