Heavy floods over the past few weeks, have wiped out the cotton produce of majority of the cultivators in Queensland's Theodore, Emerald and Darling Downs regions. Some of these cultivators had already entered into forward contracts for their produce at a price of around $500 per bale, and thus are now required to execute these contracts by procuring the crops at prevailing rates of around $800 per bale.
Meanwhile, the big wholesale traders, also involved in these hedge contracts were negotiating the terms of the contracts so as to make it possible for the flood hit cultivators to continue their business.
Further while these cultivators in order to fulfil their commitments are procuring cotton at a price which is around $300 a bale higher than what they were supposed to get, and there is not much crop left for procurement.
For some of the cultivators in Theodore it is the second consecutive year when they lost their crops.
Prior to the floods, the overall cotton crop cultivation for the 2010-11 season was estimated at four million bales, majority of which was meant for exports, and after the floods this estimate was lowered by around 10 percent to 3.6 million bales.
However, even with these new estimations, the overall production of cotton for the current season is likely to surpass the 2001's record production of 3.52 million bales.
Fibre2fashion News Desk - India
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