Australia is on track to be the third largest exporter of raw cotton in the world this year with forecasts of just under 1 million tonnes, according to a bank report released Friday.
The National Australia Bank (NAB) Agribusiness Rural Commodities Wrap said in the report that a recovery in cotton prices was likely to have acted as an incentive to production, with prices above historical average levels and more favorable than alternative crops.
However, dryland cotton plantings are minimal due to the extended and extreme drought conditions that impact growing areas.
General manager of NAB Agribusiness, Khan Horne, said the Australian dollar was forecast to track lower to 84 U.S. cents by the 2014 December quarter, which should provide further benefits to exporters.
"We hit record exports of cotton in 2012-13, so it's not surprising the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) is predicting an easing off of exports this year to just below 1 million tonnes,"Horne was quoted by the report as saying. "China has been the biggest influence on global exports over recent years and that looks set to continue. "Two years of stockpiling cotton has lifted China's stocks-to- use ratio to the point where it would be self-sufficient for 18 months without any production or trade. This has pushed the world ratio to an all-time high of 89 percent." "An acceleration in the economic recovery of major developed countries is also contributing to a turnaround in the global textile sector," Horne said.