The good news for growers as shrinking cotton production tightens the oversupply situation is that over time, this will allow cotton prices to stabilise and rise in 2009.
FarMarCo General Manager, Rob Imray, is a speaker on the physical price outlook for Australian cotton at the 14th Australian Cotton Conference, 12-14 August, at the Gold Coast.
He says that although US cotton acreage for 2008 is estimated at 3.75 million hectares, or 15pc below last year and the lowest level since 1983, “structural changes in the domestic market will still mean many growers may need to change the way they market their cotton.”
“While we expect the current situation to improve, we face a raft of challenges for domestic cotton prices in the short term.
Internationally, there is considerable uncertainty at present, creating difficulties in getting clear market signals,” explains Mr Imray.
“These problems are feeding down into the domestic market, and with several years of low production we are seeing a shrinking in merchant competition for grower cotton."
Price relativities at the farm gate between cotton and competing crops have never been more important for decision-making, and conference delegates will gain a valuable insight into the impact of the current price outlook on their bottom line.
“The short term uncertainty that has plagued the market over the 2008 cotton season would be largely alleviated with a rebalancing of the global supply and demand situation over the longer term,” says Mr Imray.
FarMarCo is a leading independent agricultural commodity marketing advisory firm and has been involved in the Australian cotton industry since the late 1980s as a broker and advisor to growers and the trade.
Australian Cotton Growers Research Association
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