By Wendy Pugh
June 1 (Bloomberg) -- Cotton exports from Australia, the fifth-largest shipper, accelerated after harvest delays and as a price rally failed to curb overseas demand amid a global supply shortfall, an industry group said.
“Normally it wouldn’t be that easy to sell at these prices but demand has been very strong,” Australian Cotton Shippers Association Chairman Arthur Spellson said by phone from Sydney. “China, Indonesia, Thailand, Korea, everywhere. They’re all screaming out for cotton.”
Futures prices in New York have surged 39 percent in the past year amid concern that rising cotton consumption would outpace supply. Australia’s harvest, which enters the market before northern hemisphere supplies later in the year, is more than 90 percent finished after wet and cloudy weather slowed picking and delayed shipments, the association said.
“There is basically a global shortage,” Spellson said. “We are also getting inquires from Pakistan, India, countries we don’t normally sell a lot to,” he said. Around 70 to 75 percent of the Australian crop has been sold for shipment and exporters are “flat out” after the delays, he said.
July-delivery cotton was unchanged at 80.05 cents a pound on ICE Futures U.S. at 2:39 p.m. Melbourne time. Futures touched 87.1 cents on April 26, the highest price for a most-active contract since March 2008.
Prices may rise to more than 85 cents a pound, with the global balance sheet “expected to be tight” over the next 12 months, Australia and New Zealand Banking Group agricultural commodities strategist Scott Briggs wrote in a report last week.
Northern Production
Northern hemisphere production later this year is unlikely to be enough to ease supply concerns, Spellson said.
“Unless yields are phenomenal, the stocks-to-use ratio isn’t going to get better, so there’ll still be a shortage,” he said. “The price should stay pretty-well supported.”
Global demand in the year started Aug. 1 will be 24.4 million metric tons compared with production of 22.1 million tons, according to the International Cotton Advisory Committee. The global harvest will rise 12 percent next year and match consumption, the Washington-based group said May 3.
Production in Australia is likely to increase to at least 1.6 million bales in the current harvest from 1.5 million bales last year as yields boost output, Spellson said. An Australian bale is 227 kilograms (500 pounds).
“It could end up a little bit higher but we won’t know until ginning is complete, which will probably be in about mid-July,” he said.
Higher returns for cotton compared with cereals and increased non-irrigated planting could boost production next year to more than 2 million bales, Spellson said. Potential output gains will be curbed by the low level of dams used for irrigation in New South Wales, he said.
