Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) forecast Australian cotton production to grow by four percent to 968,000 tonnes in this season 2017-18 largely driven by an increase in yields in irrigated plantings.

In the ongoing cotton season, total area planted to cotton is forecast to decline by 10 per cent to 500,000 hectares due to a decrease in the availability of irrigation water and dry seasonal conditions at the opening of the planting window. This forecast is a smaller decline than forecast in Agricultural commodities: September quarter 2017.

ABARES in its latest report Agricultural commodities: December quarter 2017 said that favourable returns from growing cotton compared with alternative crops (grain sorghum, maize and rice) combined with above average rains in October 2017 have provided the incentive and opportunity for Australian producers to increase dryland plantings by more than previously expected.

This was further facilitated by an extended planting window following the introduction of Bollgard 3 cotton varieties which increased the planting window to four months (August to December).

The decline in area under cotton is due to less stored irrigation water and lower soil moisture at the time of planting. As on November 23, 2017, the average storage level of public irrigation dams serving cotton-growing regions was around 59 per cent of capacity, compared with 73 per cent at the same date in 2016, the report said.

In 2017-18, Australian cotton exports are forecast to increase by 24 percent to 944,000 tonnes. While, the average returns to Australian cotton growers in 2017-18 are forecast to be Au$600 per bale (of 227 kg each) of lint (including the value of cottonseed and net of ginning costs), down from Au$609 per bale in 2016-17, mainly due to lower world cotton prices.

This forecast is supported by production growth in 2016-17 and 2017-18 and strong import demand for quality cotton from Bangladesh, China, India and Vietnam. As a result, the value of Australian cotton exports is expected to increase by 18 percent to around $2.1 billion, reflecting an increase in export volumes.