As Australian cotton growers were celebrating world cotton day this week, the value of their commodity was skyrocketing.
Cotton futures have surged more than 20 per cent in the past fortnight, reaching $US1.13 a pound this week — its highest level since 2011.
Cotton Australia chief executive Adam Kay said growers had now forward-sold around 50 per cent of next season's crop, with some growers locking in prices of $670 a bale.
"We are seeing a situation where the supply is less than demand — that is really driving prices," Mr Kay said.
"The word on the street is that the Chinese crop might not be as good as they thought, the Indian crop might not be as good as hoped, and next season there's talk that the Brazilian crop might be down by 10 or 20 per cent."
"These are all factors that are driving the market at the moment."
TradingEconomics.com has reported heavy rains are threatening cotton crops in major US growing regions such as Texas, and a pest called pink bollworm "is rapidly spreading across fields".
Meanwhile, Mr Kay said great seasonal conditions in Australia had the cotton industry on track to produce around 4.5 million bales next season.
"We've a rare situation where we have tremendous water in the [Murray-Darling] system, the major storage dams are full, so growers can confidently forward-sell at these exceptional prices."
Twelve months on from China's soft ban
A couple of years ago, China was buying around 70 per cent of Australia's cotton crop.
Then in October 2020, the Chinese government started to tell mills to stop buying Australian cotton, or risk their quotas being slashed.
Australian cotton sellers suddenly had to scramble to find new markets for their product.
"Everyone was nervous at the start [of the soft ban]," Mr Kay said.
"But the Australian cotton shippers have done a magnificent job in selling the crop to other markets and developing markets."
Australian Cotton Shippers Association chair Michael O'Rielley said the industry had worked hard to diversify markets for Australian cotton.
"Right now, Vietnam is our biggest export market, followed by Indonesia which currently has the most upside," he said.
"They are our closest neighbour, and we have short shipping times."
Asked whether China was expected to remove its ban soon, Adam Kay said the industry "was not holding its breath".
"We'd love to see China come back in; we know the spinning mills that take our cotton are very disappointed they can't get hold of the high-quality Australian cotton.
"But at the end of the day, [the soft ban] is coming from a higher level than them, and we just hope it might turn around in the future."
