Cotton production in Australia, the worldΆs third-biggest exporter, may decline to the lowest level in at least three years as drought curbs crops and water availability, according to a growersΆ group.
Output in 2013-2014 may be less than the 4 million bales forecast in September, said Michael Murray, policy manager for Queensland and water at Sydney-based Cotton Australia. That compares with a crop of about 4.4 million bales in 2012-2013, and the record 5.3 million bales harvested in 2011-2012. An Australian bale weighs 227 kilograms (500 pounds).
The groupΆs forecast adds to signs that drier-than-usual weather in parts of Australia is hurting farm output in the $1.5 trillion economy. About 65 percent of Queensland is in drought after its driest December since 1938, while New South Wales had its driest January since 2003, Bureau of Meteorology data show. Australia may bring forward income assistance for farmers due to the drought, Prime Minister Tony Abbott said today.
“ItΆs been a hotter and drier summer than usual and water use has been a little higher than average,” Murray said by phone from Queensland. “ThatΆs meant that in some valleys, some growers are running short of water.”
Benchmark futures in New York advanced 0.4 percent to 85.90 cents a pound at 10:23 a.m. in Singapore, taking gains this year to 1.5 percent. Goldman Sachs Group Inc. says rising global supply will drive prices to 75 cents in three months. Global stockpiles on July 31 may reach a record 97.6 million bales of 480 pounds, according to the U.S. Department of Agriculture.
Planted Area
The area planted to cotton nationwide fell 6.6 percent to 413,000 hectares (1 million acres) in 2013-2014 from a year earlier, the Australian Bureau of Agricultural and Resource Economics and Sciences said in December. Production may drop to 975,000 metric tons in 2013-2014 from 1 million tons, said the Canberra-based bureau, which is known as Abares.
The drought is also spurring farmers to cull cattle as pastures wither and the price of feed advances. Slaughterings may increase 5.6 percent to 8.9 million head in the year to June 30, boosting exports to a record, Abares estimates. The price of sorghum, used to feed livestock, climbed to A$346.50 ($311) a ton in January, the highest since 2007.
The cotton crop may still be AustraliaΆs third- or fourth-biggest, Murray said yesterday. Rain predicted for Queensland in the next week may provide some relief, he said. The last time Australia produced less than 4 million bales was 2010-2011, according to Cotton Australia, which represents the industry.
El Nino
Most climate models suggest the tropical Pacific Ocean will warm through the southern autumn and winter, with some models predicting the trend may approach El Nino thresholds by early winter, the Bureau of Meteorology said Jan. 28. An El Nino, which is associated with drier conditions in Australia, particularly the east, may restrict irrigated cotton output, Australia & New Zealand Banking Group Ltd. said yesterday.
“Obviously there is a very serious drought problem in western Queensland,” Abbott told reporters in Brisbane. “Parts of New South Wales and even parts of northern Victoria are suffering from the drought” and the government is looking at bringing forward the start of a plan that provides income support to people in exceptional circumstances, he said.
