SYDNEY, May 12 (Reuters) - Australia's cotton crop has been damaged by rain and flooding, and the 2009/10 harvest from the world's third largest exporter is seen around 1.5 million bales, below the 1.6 million bales earlier forecast, industry officials said.
"The growers in central Queensland have had some dreadful results in both terms of yield and quality," Gordon Cherry, Chief Executive of Dunavant Enterprises, the world's largest privately owned cotton merchandiser said on Wednesday.
"Elsewhere the results have been quite good," he said, adding the harvest was 70-75 percent complete and could be quickly finished as weather was favourable.
But the harvest would still be up from last year's 1.4 million bales and Cherry expects production to rise to 2.2 million bales next year as ample rainfall has boosted water available for irrigation and some farmers are likely to switch crops.
Years of drought has hurt Australia's cotton production since the record harvest of 3.4 million bales in 2001.
Bob Bell, Chief Executive of Namoi Cotton Co-operative, Australia's largest cotton grower also saw this year's crop at around 1.5 million bales and said about 80 percent of the crop had been sold to buyers in China, Thailand, Indonesia and Japan.
He added that some sales to the Indian sub-continent had also been made as supplies there were tight.
Bell also predicted rising output for next year as low wheat prices are encouraging large-scale broadacre farmers to turn to cotton as returns from growing the fibre could be as much as four times higher.
"We have seen a lot of interest from large-scale wheat farmers in planting cotton," said Cherry.
The 2009/10 production shortfall comes at a time when world supplies have tightened as demand recovers following the global financial crisis that halved prices in early 2009.
Prices have recovered to more than 80 cents a pound -- still short of around $1 per pound cotton fetched in March 2008 -- as demand recovers.
"Supply is very tight right now," said Cherry, adding that a global surplus of the fibre was unlikely ahead of the northern hemisphere harvest in late 2011.
