Report Highlights:
Cotton production in Australia is set for a fourth successive year of high production in marketing year (MY) 2024/25, forecast at 5.5 million bales, which would be the third largest crop. The prospect of average rainfalls over the winter/spring period if realized would establish improved irrigation water availability for growers. This, compared to dry conditions in southern Queensland and northern New South Wales in the lead-up to planting the MY 2023/24 crop, which adversely affected the planted area.
Despite this challenge in Australia’s biggest cotton producing region, the MY 2023/24 estimate is for a 5.0 million bale crop on the back of larger cotton crop planting in the more southern areas. Exports are forecast to reach 5.8 million bales in MY 2024/25, a drop of 200,000 bales from the MY 2023/24 estimate despite a higher crop forecast. This is due to the first nine months of trade in the forecast year being from the MY 2023/24 crop, the fourth highest following the MY 2022/23 record of 6.2 million bales.
EXECUTIVE SUMMARY
Cotton production in Australia is set for a fourth successive year of big production in marketing year (MY) 2024/25, forecast at 5.5 million bales. If realized, this would be the third largest, slightly below the record 5.85 million bales produced in MY 2021/22.
This Australian Bureau of Meteorology is set to transition its El Niño (drier than usual) conditions to neutral in the current fall, indicating a likelihood of average rainfalls in the coming months. With good levels of water currently in irrigation storage dam schemes and the prospect of average rainfalls during the typical winter/spring recharge period for these schemes and on-farm irrigation storage dams, industry confidence exists that conditions should support another big cotton crop.
Futures cotton prices relating to the forecast crop at this stage are firm at a little above the previous 10-year average, with key input costs moderating over the last two years. The market expects adequate economic incentives for growers to plant a big cotton crop for the forecast year.
The forecast planted area is expected to increase by five percent to 600,000 hectares from an estimated 570,000 hectares in MY 2023/24, associated with an increase in irrigated cotton area. This is after a lower-than-expected planting for the current season in southern Queensland and northern New South Wales, caused by dry conditions that limited water harvesting in the lead-up to planting, which started in October 2023.
The overall cotton yield in the forecast year is also anticipated to improve slightly, in part due to the forecast increase in irrigated cotton but more so due to planting in southern Queensland and northern New South Wales being delayed somewhat due to the dry conditions in the lead up to the normal start of planting in October.
Exports are forecast to fall by three percent to 5.8 million bales in MY 2024/25 but still achieve the fourth-highest result from the record of 6.2 million bales for MY 2022/23. Despite the forecast increased cotton production for MY 2024/25 to 5.5 million bales, a drop in exports is forecast due to the first nine months of the marketing year being heavily influenced by the lower production estimate of 5.0 million bales from MY 2023/24.
Source: USDA-FAS