US Agricultural Counsellor: Australia'S Cotton Production And Export Expectations Expanded

Due to the sharp increase in planting area, Australian cotton production and export expectations were greatly improved in 2008/09.

Despite optimistic forecasts, cotton production in Australia is still below the 10 year average in 2008/09.

On Monday, the United States Department of agriculture's Agricultural Products Export Bureau released the agricultural Counselor's report. The report said that due to the expansion of planting area, Australia's cotton production and export expectations were greatly improved in 2008/09.

However, although the forecast is optimistic, this forecast shows that output in 2008/09 is still below the 10 year average.

The precipitation in the main areas is very good, which greatly improves the irrigation water resources of cotton in 2008/09.

The report assumes that the normal weather conditions resulted in the enlargement of the 2008/09 cotton planting area in October and November.

During the period of sorting out this report, cotton picking in most parts of 2007/08 has begun. Due to the small scale of production, the picking work may be completed ahead of schedule.

The report revised the output forecast for 2007/08 to reduce the 2007/08 production to the minimum yield of nearly 25 years.

The cotton planting area is expected to expand to 190000 hectares in 2008/09, and the expansion of planting area is the whole reason for cotton production.

It is expected that the yield per unit area is slightly higher than the average of 10 years. Therefore, the yield difference has not been utilized to increase the output.

Australian cotton production is projected to increase to 1 million 500 thousand bales in 2008/09.

Although production is expanding, the forecast data is still below the 10 year average output of 2 million 300 thousand packages.

Long and severe drought has reduced production to the lowest level since 2002/03.

Some forecasts are more optimistic than the forecast, and others predict that the output will be 20 million bales.

However, although such a production scale is possible, it requires higher than average precipitation.

ABARE reports that due to global demand is higher than output and world prices are higher, cotton returns in 2008/09 will be improved.

The report slightly revised cotton production in 2007/08, to slightly more than 500 thousand packages, which is in line with the industry's forecast.

The cotton planting land is poor, and floods occur in some areas. The precipitation is not in time, resulting in cotton production falling to the lowest level in 25 years.

Cotton exports are expected to increase to 1 million 300 thousand bales in 2008/09, higher than the 1 million package forecast for the previous year.

Traditionally, cotton processing and export were picked after cotton harvest in the year, but the situation has changed this year because of its lowest level in 2002/03.

The report points out that there may be a gap between the increase in output and the increase in exports.

Although production has increased substantially, the report points out that the forecast is still below the 10 year average output of 2 million 500 thousand packages.

The report says cotton production may take several years to recover before the drought.

Since the droughts at the beginning of 2002/03, the total size of Australian cotton exports has been shrinking dramatically.

However, although exports have declined, exports to China have increased over the past 5 years.

China has developed from Australia's fifth largest export market to the largest market in less than 3 years.

The report predicts that this market will continue to eat a larger proportion of Australian cotton and may digest cotton production in the foreseeable future.

The report points out that cotton growers lack confidence in the improvement of world cotton prices.

Cotton farmers are especially concerned about the appreciation of the Australian dollar, because the appreciation of the Australian dollar has offset the benefits of stronger world commodity prices.

Because of the appreciation of the Australian dollar, many agricultural sectors in Australia have not benefited from the increase in world commodity prices.

Cotton is an example. The appreciation of the Australian dollar has exceeded the increase in cotton prices.

The relative increase in domestic grain prices in Australia also offset some of the benefits of global price improvements.

The industry is worried 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.