U.S. Agricultural Counselor: Australia's cotton production and exports are expected to expand
Due to the dramatic increase in planting area, Australian cotton production and exports are expected to increase significantly in 2008/09. Despite the optimistic forecast, Australian cotton production in 2008/09 is still below the 10-year average. On Monday, the Agricultural Counselor's Report of the Agricultural Export Sales Service of the United States Department of Agriculture released the report of the Agricultural Counsellor. The report stated that due to the expansion of the planting area, Australia's cotton production and exports are expected to increase substantially in 2008/09. However, although the forecast is optimistic, this forecast shows that the output in 2008/09 is still below the 10-year average. The precipitation in the main areas was very good, which greatly improved the irrigation water resources for the 2008/09 cotton year. The report assumes that normal weather conditions have led to an expansion of the 2008/09 cotton area planted in October and November. During the compilation of this report, most areas have started cotton picking in 2007/08. Due to the small production scale, the picking work may be completed ahead of schedule. The report revised downwards the production forecast for 2007/08, which reduced the output in 2007/08 to the smallest output in the past 25 years. Cotton area In 2008/09, the cotton planting area is expected to expand significantly to 190,000 hectares. The expansion of the planting area is the whole reason for the increase in cotton production. The report expects that the yield is slightly higher than the 10-year average, so the yield difference is not used to increase production. Yield 2008/09 Australian cotton production is expected to increase significantly to 1.5 million bales. Although production has expanded, the forecast data is still lower than the 10-year average production of 2.3 million bales. The prolonged and severe drought reduced production to the lowest level in history since 2002/03. Some forecasts are more optimistic than the report’s forecasts, and others say that the output is 20 million bales. However, although such a production scale is possible, it requires higher than average precipitation. ABARE reports that because global demand exceeds production and world prices are higher, the rate of return on cotton in 2008/09 will be improved. The report slightly revised down the 2007/08 cotton output to slightly over 500,000 bales, which was in line with industry forecasts. The land where cotton is grown is barren, floods in some areas and delayed rainfall have caused cotton production to fall to its lowest level in 25 years. Exports 2008/09 cotton exports are expected to increase to 1.3 million bales, higher than the 1 million bales estimated in the previous year. Traditionally, cotton was processed and exported after the cotton was picked that year, but the situation has changed this year as production has fallen to the lowest level since 2002/03. The report pointed out that there may be a gap between the increase in production and the increase in exports. Although production has increased substantially, the report pointed out that the forecast is still lower than the 10-year average production of 2.5 million bales. According to the report, it may take several years for cotton production to return to pre-drought levels. Since the drought in early 2002/03, the total scale of Australian cotton exports has been shrinking significantly. However, despite the decline in exports, exports to China have continued to increase in the past five years. China has grown from Australia's fifth largest export market to the largest market in less than three years. The report predicts that this market will continue to consume a larger proportion of Australian cotton and may digest the increased production of cotton in the foreseeable future. The price report pointed out that cotton farmers lack confidence in the improvement of world cotton prices. Cotton farmers are particularly concerned about the appreciation of the Australian dollar, because the appreciation of the Australian dollar offsets the benefits of stronger world commodity prices. Due to the appreciation of the Australian dollar, many agricultural sectors in Australia have not benefited from higher world commodity prices. Cotton is an example. The appreciation of the Australian dollar exceeds the increase in cotton prices. The relative increase in domestic food prices in Australia has also offset some of the benefits brought by the improvement in global prices. Industry insiders worry that the competitiveness of cotton for land may be lower than in previous years. In some cotton-producing areas, the competitiveness of other crops may be greatly improved, for example, sorghum.