Commodities

Cotton tipped to be third most valuable export commodity

Global demand for Australian cotton remains strong. Photo: Cotton Australia

AUSTRALIAN cotton is forecast to become the third most valuable export commodity after wheat and beef, in a year that also witnessed a record export result for one month.

Official figures from the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES), reveal that in August 2022, cotton worth nearly $866 million was exported alone, almost double the entire value of cotton exported in 2020.

Cotton Australia chief executive officer Adam Kay said the figures reveal the inherent risks in farming.

“In calendar year 2020, $455M of cotton was exported to various offshore markets. That was reflected in the drought-impacted 2019-20 yield of less than 590,000 bales which was the worst result in recent history,” Mr Kay said.

Cotton Australia CEO Adam Kay

Mr Kay said the drought stood in stark contrast to flooding which has made it difficult to pick the 2021-22 crop, and brought considerable value losses through downgrades in some areas, as well as making planting of the 2022-23 crop difficult, and casuing winter-crop losses.

“Our thoughts go out to all those growers facing losses and hardship.”

ABARES figures show $1.9 billion worth of cotton was exported in 2021, and from January to August 2022, 562,270 tonnes worth $2.046B was exported.

“Our forecast for the 2022 crop was around 5.2 million bales and we exceeded that with a result of 5.5 million.

“What we are seeing here is the result of some harvesting delays due to the wet weather, and also some earlier issues with shipping and container availability.

“The good news is those bottlenecks and container shortages are showing signs of easing and that should ensure an easier passage of our cotton to the various overseas markets.”

Efforts towards clearing the backlogs and overcoming challenges, along with the international marketing of cotton through Australian Cotton Shippers Association members, has seen export forecasts for 2022-23 reach $7.0B, but that is expected to be reduced given the flooding across many growing areas, delaying picking and planting.

This third ranking in export-commodity value, after wheat and beef, is the highest ranking for cotton since 1988, and coincides with falling livestock exports due to lower prices for red meat and wool.

Global export figures

ABARES has also released export figures per country with some surprising results.

In the first three months of the 2022-23 season more than $2.212B worth of cotton was exported to 17 countries, while in the entire 2021-22 season, the total value of exports was $2.228B.

Bangladesh has almost doubled its 2022 imports of Australian cotton to $171M in the first three months of this season, while India has imported $110M in value more than the previous season.

The other countries to record significant increases are South Korea, Malaysia, Thailand and Turkey.

While global growth expectations have been lowered due to widespread inflation, a sluggish Chinese economy, and dropping consumer demand, Australian cotton remains in high demand due to its quality and crops reduced by drought in the US, and flooding in Pakistan.

Mr Kay said about 30pc of the 2023 crop was now forward sold and those solid export totals will continue to gain momentum in coming months.

Source: Cotton Australia

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