Cotton prices, water availability drive grower optimism

Liz Wells, August 30, 2021

The first of the season’s cotton plants are emerging as sowing gathers pace, starting in Central Queensland. (Photo: Cotton Australia)

BUOYANT cotton prices and high water levels in most of the major storage dams have set growers up for a promising season as sowing of this year’s crop gathers pace in the northern growing regions.

Left Field Solutions principal Pete Johnson said the price for 2021 crop at the moment was around $660/bale, and for next year’s $620/bale.

“Growers have had good opportunity for next year to lock in over the last month or so for anywhere between $600/bale and $625/bale. A lot have done a portion. Depending on how big the crop will be, there could quite easily be 30 to 40 per cent sold at really good levels,” he said.

Mr Johnson said behind the attractive prices was a high level of general speculative demand for commodities as an inflation hedge.

“There is a lot of ‘funny money’ in the market at the moment and the speculative funds continue to buy,” he said.

On the demand side, Mr Johnson said there were a number of factors that had created strong demand for cotton.

Pete Johnson

“The Brazilian and United States crops are delayed, and it is not a massive Australian crop. So, the immediately available supply is adequate but not abundant,” he said.

“On top of that, an exaggerating factor is there are so many logistics bottlenecks that a lot of product is held up at origin and/or in transit that hasn’t reached destination.

So, you have purchasing managers who are looking at warehouses that haven’t as much product in them as they would like so they go and buy more, even though they have some bought, but it hasn’t arrived. That is not just for raw cotton but is all the way down the textile supply chain.”

Mr Johnson said good water levels in most of the major storage dams throughout the growing regions had given growers cause for optimism.

“Central Queensland is still the area that has missed out with water. Fairbairn Dam is only on 15 per cent capacity. Everywhere else has good water,” he said.

“There is good subsoil moisture. It will be a good-sized crop. Depending on how much dryland goes in and how yields end up, it will be a 4.5 to 5.0-million-bale crop.”

Mr Johnson said growers were factoring in the disruption caused by the COVID pandemic.

“With COVID, people are being pragmatic with their ability to access labour and potential inputs,” he said.

“If it wasn’t for COVID we would possibly see a larger crop.

“There is so much water in many of the dams that people will be able to hold over and look to the following year as well.”



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