By Wendy Pugh
April 22 (Bloomberg) -- The cotton harvest in Australia, the fifth-largest shipper, was probably two-thirds committed for sale amid an outlook for “tight” global supplies after India banned exports, the country’s largest supplier said today.
“World supplies of cotton will be tight for at least the next three and up to six months,” Namoi Cotton Co-operative Ltd. Chief Executive Officer Bob Bell said by phone from Toowoomba, in Queensland state. Australia’s current crop “will be very much in demand,” he said.
Cotton prices in New York have gained 67 percent in the past year and reached a two-year high yesterday after India, the world’s second-biggest grower, halted exports. The Australian harvest has been delayed by cool weather as well as rain and flooding that damaged some crops in northern areas.
“In the southern regions, as well, ginning is about three weeks behind normal,” Bell said today. “Most of our gins are running, the quality is OK and yields are about where growers budgeted them.” Some buyers may delay purchases as they wait to assess any effect from the adverse weather, he said.
July-delivery cotton declined 0.2 percent to 84.196 cents a pound on ICE Futures U.S. at 4:18 p.m. Melbourne time. Futures touched 86.8 cents yesterday, the highest price for a most- active contract since March 2008.
Prices may trade about 80 cents to 85 cents for some time, before falling later this year when the next U.S. harvest pushes futures into the 75 cent to 80 cent range, Bell said.
Namoi expects to gin about 450,000 bales and to sell about 600,000 bales from this crop, which it estimates at 1.5 million bales. A bale weighs 227 kilograms (500 pounds) in Australia.
Chinese Demand
China was “quite active in the market” in the last two or three months and is likely to continue buying ahead of its harvest later this year, Bell said.
“One would think that for the next three months there would be further demand coming from China,” he said.
Price levels for cotton compared with grains, and more non- irrigated planting of the fiber may boost the area next season to about 250,000 hectares (617,763 acres) with estimates to rise if rains fill up dams, Bell said. The area this season was about 184,000 hectares, according to industry forecasts this year.
Northern New South Wales and southern Queensland have a 60 percent to 80 percent chance of above-normal rain in May to July, according to an Australian Bureau of Meteorology report today.
“In the event that we do get major rainfall, you would certainly see those plantings increase,” Bell said. Some estimates have reached as high as 300,000 hectares, he said.