Key points:

• After the smallest crop in 40 years, Australia's cotton harvest is shaping up to be four times larger in 2021
• Cotton Australia estimates this year's crop will produce about 2.5 million bales, valued at $1.5 billion
• The harvest is already underway near Emerald in central Queensland

Australia's cotton harvest is getting underway and early estimates suggest the crop will be four times larger than last year's and worth about $1.5 billion.

If it all comes to fruition, it will be a noticeable comeback for the industry, which has struggled through years of drought and had one of its smallest crops on record in 2020.

"It was a lean year last year with only 600,000 bales, the smallest crop in 40 years," Cotton Australia chief executive Adam Kay said.

"It's not back to the levels we'd like to be at [of] around 4 million bales, but no-one is complaining."

According to ABARES, the good seasonal conditions that led to Australia producing its biggest wheat crop on record resulted in the area planted to cotton this season increasing by an estimated 395 per cent to 295,000 hectares.

Life without China

The cotton industry got baled up in China's trade stoush with Australia last year, when Chinese mills were suddenly told not to buy Australian cotton.

China had been taking about 65 per cent of the Australian cotton crop in a trade worth $800 million.

Mr Kay said the unfortunate situation had not changed, but the industry had quickly found other markets.

"China is not taking any Australian cotton [at the moment], there's no increase in tariffs or anything like that, they're just not taking our crop," he said. 

Mr Kay said overall the cotton market was looking strong and Australian growers were expecting to receive about $600 a bale this year.

He said the cotton price was "historically at the very high end of things, which is great news".

Cotton futures prices have reached nearly 90 US cents a pound this week, which is the highest it has been since mid-2018.

Every drop counts

The La Niña weather pattern has not delivered widespread rain to all of the cotton-growing regions, and on Queensland's Darling Downs, irrigators are nervously doing their figures, determining if they have enough water in storage to finish their cotton crops.

Derryck Mickelborough, who farms west of Dalby, told ABC Rural he had enough water in dams, but only by the skin of his teeth.

"We've learned a few lessons over the past and like to keep our planting areas small and do a good job of it," he said.

Mr Kay said when it came to soil moisture and water for irrigation, the outlook for cotton growers was varied.

"Parts of central Queensland are quite lean [dry], but near St George they've done well," he said.

"Parts of New South Wales are a bit lean too in the north-west, so [it's] a mixed bag across all of the areas, but [it's] good to see at least a bit of crop in all of them."

While a few growers near Emerald have now started picking, the bulk of Australia's cotton harvest will occur between March and May.

Meanwhile, in Australia's far north, about 3,000 hectares has been planted during the wet season in the Northern Territory, with growers expected to make a final decision on building a cotton gin within the next few months.