Cotton production holds significant economic importance for various agricultural communities in eastern Australia. The number of farms engaged in cotton cultivation fluctuates seasonally, ranging from approximately 1,200 to 1,500, contingent on prevailing weather conditions. The extent of cotton planting tends to increase in years with elevated soil moisture and greater water availability.
The state of New South Wales contributes to around two-thirds of Australia’s total cotton cultivation, with the remaining one-third situated in Queensland. The Australian cotton industry has experienced substantial benefits from advancements in plant varieties and genetic modification. These innovations have not only enhanced productivity but have also paved the way for expanding cotton cultivation into new regions such as far north Queensland, the Northern Territory, and Western Australia.
Commercial-scale trials have successfully demonstrated the agronomic viability of cotton in these previously unexplored areas. In the upcoming 2022-23 season, several commercial crops are set to be planted in these regions. The completion of a gin near Katherine in the Northern Territory, along with plans for another in Kununurra in northern Western Australia, is anticipated to catalyse further growth in these emerging cotton-producing regions.
Cotton Supply and Demand Trends
Anticipated changes in Australian cotton production for 2022-23 signal a decline following the record-setting output in the previous year, 2021-22. The resurgence of Australian cotton production in 2020-21, following two years of drought in 2018-19 and 2019-20, showcased a robust recovery. In the upcoming 2022-23 period, a continuation of favourable climatic conditions, coupled with above-average water availability, is expected to drive extensive dryland and irrigated cotton planting, presenting a promising yield potential.
However, this optimistic outlook is tempered by expectations of a slight decline in yields. The potential factors contributing to this decline include disease pressure and soil compaction resulting from consecutive large plantings. Additionally, wet conditions in major production regions may pose challenges by limiting growers’ access to fields for planting activities.
The Australian Bureau of Agricultural and Resource Economics (ABARES) projects a decrease in Australian cotton production for the 2022-23 season, estimating it to reach 5.1 million (227-kilogram) bales. This forecast reflects the complex interplay of various factors influencing the supply and demand dynamics within the Australian cotton industry.
Projected Production for 2022-23
According to the latest forecast from ABARES, Australian cotton lint production is anticipated to decrease to 1,146 kilotonnes in the upcoming 2022-23 season, representing a 10% decline from the robust levels seen in 2021-22. Despite this reduction, Australian cotton production is expected to maintain historically high figures, driven by ongoing favourable climatic conditions and abundant water availability.
The decrease in production, following the record-setting 2021-22 season, can be attributed to several factors. Slightly lower yields are anticipated due to heightened disease pressure and soil compaction resulting from the substantial crop in the previous season. Unfavourable planting conditions in certain regions further contribute to this decline. The presence of saturated soil profiles and an above-average rainfall forecast during the planting window may limit the planted area. It is projected that total cotton plantings will cover 579,000 hectares in 2022-23, down from an estimated 635,000 hectares in the previous season.
The recovery and strength observed in cotton plantings and production during the 2020-21 season were linked to the onset of La Niña climate conditions. These conditions, associated with above-average rainfall in eastern and northern Australia during winter, spring, and early summer, were favourable for the cotton industry. The Australian Bureau of Meteorology has recently announced a third consecutive La Niña event, coupled with an ongoing negative Indian Ocean Dipole. The convergence of these climatic drivers is expected to bring above-average rainfall to major cotton production areas in the coming months.
Water storage levels in growing regions have experienced replenishment over the past two years, facilitating extensive irrigated cotton plantings. Simultaneously, the forecasted wet conditions are anticipated to encourage increased dryland cotton plantings, contributing to the overall dynamics of the 2022-23 cotton production landscape.
Projected Exports for 2022-23
ABARES foresees Australian cotton exports reaching approximately 1,500 kilotonnes in the 2022–23 period. The delays in harvesting and exporting the record-breaking 2021-22 cotton crop have resulted in an estimated 87% of the crop being earmarked for export in the upcoming season. The substantial crop expected in 2022-23 will significantly contribute to the overall export volumes.
Despite a challenging global economic outlook, Australian cotton exports are anticipated to maintain their strength, propelled by the premium quality of Australian cotton and its favourable pricing compared to machine-picked cotton from other countries. This advantage arises from trade restrictions to China, positioning Australian cotton with a competitive edge. The forecasted export value for Australian cotton is expected to rise to A$7.1 billion (US$4.8 billion) in 2022-23. This increase is, in part, attributed to a high proportion of the 2021-22 cotton crop being forward sold during a period of significantly higher prices. The forward-selling strategy has played a role in enhancing the export value for the upcoming season.
Projected Returns for Growers in 2022-23
ABARES anticipates a decrease in the average return to Australian cotton growers in the 2022–23 season, falling to A$717 (US$491) per bale (227 kilograms). This marks a significant 23% decline in returns compared to the 2021-22 period, attributed to the reduction in international demand and prices for cotton.
Cotton Exports
In the preceding 2021–22 season, Vietnam and Indonesia emerged as the primary export destinations for Australian cotton, constituting 41% and 20% of total Australian exports, respectively. Notably, Turkey and Thailand have also ascended as key destinations for Australian cotton, reflecting the evolving landscape of cotton export markets.
Wrapping Up,
For detailed insights into Australia’s cotton harvest for 2022/23, contact us at KG2 Australia today!
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