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Production:
Australian cotton production for 2007/08 is forecast at 0.7 million bales, or 158 TMT. If achieved, this would be the lowest level of production since the 1983/84 drought and would be well below the historically low 1.1 million bales produced in 2006/07. Post's forecast weighs in well below ABARE's current forecast but remains above some industry projections.
Post expects that the 2007/08 crop will be planted in October/November in 2007. Post has assumed average rainfall from now until planting time, however even if average rainfall is received, production will likely not surpass this forecast level. Post advises that serious downside potential exists for the current forecast if drought conditions persist. Remaining water reserves could be used for the sustenance of inland urban populations rather than for irrigated agriculture.
Lower production is expected to be driven primarily by lower planted area, forecast at 100,000 hectares for 2007/08, down from the estimated 143,000 hectares in 2006/07. Post has also assumed a slightly lower yield as dryland cotton is expected to increase its share of production under more normal weather conditions and lagging irrigation water supplies.
The current low prices received for cotton contrasts with historically high prices received for grain, particularly feed grain. Industry sources suggest that switching from cotton to grain will likely place furtherdownward pressure on cotton acreage in 2007/08.
United States Department of Agriculture Foreign Agricultural Service
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