Australia, the world's third largest cotton exporter, could see production of the fibre hit record levels during the next three years, despite some crop loss due to floods in recent weeks, an industry executive said on Monday.
Industry is also positive on prices as cotton struck a record high on Monday on rising demand from China, the biggest user of the fibre, the head of Namoi Cotton, one of the country's largest cotton ginning firms said.
High rainfall across Australia's main cotton growing regions in Queensland and northern New South Wales damaged some crops but filled irrigation reservoirs to capacity, ensuring water for irrigated crops over the next three years.
"These dam levels, combined with record prices, will underpin strong production in 2012 and into the 2013 crop representing very positive news for the Australian cotton industry after years of drought," Namoi chief executive Jeremy Callachor said in a statement.
Namoi gins about a quarter of the country's cotton, competing with Singapore's Olam International for pole position.
Estimates of Australia's 2010/11 cotton crop had been put as high as 4.4 million bales but because of flood damage forecasts have been pulled back to under 4 million bales.
Still output is likely to exceed the previous production high of 3.52 million bales harvested in 2001/02 and could be around double the 1.8 million bales harvested last year.
US cotton rose to a record high on Monday, climbing by its daily limit for a second straight session following gains in China's cotton market which rose on expectations of higher demand from the textile industry amid tight supplies.
Low levels of worldwide cotton inventories followed prices falling during the global economic crisis discouraged farmers to plant the fibre. In late 2008 prices fell to the lowest level since 2001. The production squeeze as demand recovered saw record prices in the last quarter of 2010 and the new 2011 year.
The key March cotton contract on ICE Futures U.S. rose 3.2 per cent on Monday to $US1.619 per lb. At the height of the economic crisis in late 2008 cotton fell below 40 cents per pound.
Namoi chairman Stuart Boydell told Reuters crop losses in New South Wales, where about two-thirds of the country's cotton was grown, were not significant.
"The outlook for the cotton industry is phenomenal over the next three years as (irrigation) dams are overflowing and there's a world shortage of high quality cotton," Mr Boydell said.
"Chinese mills are paying record prices and I suspect some speculators are to," he said
Mr Boydell said Australia's 2010/11 cotton crop could still be close to 4 million tonnes as farmers grew large amounts of dryland cotton in addition to irrigated crops.
Output has also been assisted by better crop varieties that have boosted irrigated cotton yields to around 10 bales a hectare compared with around 6 bales per hectare a decade ago.
