Cotton

Cotton has been grown in Australia since the early 1800s and is now a $2 billion industry, grown in areas from the New South Wales Riverina to central Queensland

Cotton is a natural fibre, grown on a plant related to the hibiscus, producing cotton ‘bolls’ which contain the fluffy cotton ‘lint’ and seeds. During processing, or ginning, the lint is separated from the seeds and shipped overseas where it is used to produce textiles. Production is measured in ‘bales’, with one Australian bale equal to 227 kilograms. Cotton seeds are also a valuable commodity used in livestock feed and cooking oil.

Cotton is an annual crop and the area planted in Australia varies from year to year depending on water availability and cotton prices. Australia’s average annual cotton production has risen significantly from 9,000 bales in the 1960s to an average 1.5 million bales from 2005 to 2010.  In 2016-17, Australia is forecast to produce 4.5 million bales from 525,000 ha planted following favourable rainfall conditions and prices.

While China, India and the USA are the world’s largest growers of cotton, Australian irrigated lint yields are about three times the world average, and over the last 20 years Australia’s cotton yield has increased by 38%. Most of this yield gain is attributed to seed technology.

Cotton is an important export commodity for Australia, representing 4.5% of major agricultural commodity exports. The main buyers of Australian cotton are currently China (68%), Indonesia, Thailand, South Korea, Bangladesh and Japan. Australia’s cotton industry has a reputation as a reliable supplier of high quality cotton, and can attract a price premium.

Factors affecting global cotton prices include the state of the world economy, fashion trends, synthetic fibre prices, weather, natural disasters, as well as cotton supply and demand factors.

The Rural Funds Group made an investment in the Queensland cotton industry in late 2016 with the acquisition of the Lynora Downs property in central Queensland. While this is the fund’s first major cotton property purchase, RFM has managed cotton operations in New South Wales for around 20 years.

 

Sources:

  • Cotton Australia
  • United States Department of Agriculture
  • Australian Department of Foreign Affairs and Trade