Tuesday, December 7, 2010

Australia Increases Cotton Forecast to Record After Rainfall

Cotton production in Australia, the fourth-largest exporter, may increase to a record as rainfall and increased prices boost planting, the government’s commodity forecaster said.

Output may gain to 894,000 metric tons in 2010-2011 compared with a September outlook for 653,000 tons, and up from 387,000 tons last season, the Australian Bureau of Agricultural and Resource Economics and Sciences said in a report today. The forecast equals 3.9 million bales of 227 kilograms (500 pounds), according to Bloomberg calculations.

Cotton futures surged to an all-time high last month on concern that rising demand led by China would outpace supplies. Australian planting gained after wet weather ended drought in the country’s east, boosting irrigation dams and encouraging more planting of crops that rely on rainfall.

“The current full soil-moisture profiles and high water- storage levels in Queensland and New South Wales has given summer crops a very good start to the season,” Paul Morris, acting executive director at the bureau said in a statement. Summer is from December to February in Australia. The previous record output was 819,000 tons in 2000-2001.

Cotton for March delivery fell 1.4 percent to settle at $1.3043 a pound on ICE Futures U.S. in New York yesterday. Futures reached an all-time high of $1.5195 a pound on Nov. 10.

Planted area this season was estimated at 557,000 hectares (1.4 million acres), compared with 208,000 hectares last year, and included a record non-irrigated 203,000 hectares, the forecaster said.

Australian production may top 4 million bales for the first time, industry group Cotton Australia said Dec. 1.

Rainfall, which has downgraded the quality of cereal crops, remained beneficial for cotton producers as it boosted water supplies, Cotton Australia Communications Manager David Bone said by phone today.

“We certainly haven’t had any reports of significant inundations,” he said from Narrabri in northern New South Wales.

Rice production this season may be 802,000 tons, the bureau forecast today, up from 206,000 tons a year earlier, and compared with a September outlook for 611,000 tons.

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