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Australian cotton planting report 2016

Posted by Ruman on November 2, 2015

2015 Current crop

60-70% of the current 2015 crop is sold by now. Most of the Australia cotton would be sold to the mills by this time in previous years . Due to the sluggish demand, No excess import quota by China (except WTO 840k MT), slowing economic growth have made the spinning mills across the board cautious about buying forward. Australian basis for Dec/Jan/Feb has softened, we can arrange prompt shipment. 

2016 New crop planting update

Planting is about 80% completed, estimated crop size would be around 2.2-2.3 million bales. Even though estimated new year crop is larger than the current year, final output would depend on how hot this summer season gets and the average yield. Australian growers had a record average yield of 15 bales/hectare in 2015. About 50-60% of the estimated 2016 crop has changed hands from growers to the merchants. 

World Trade 

There are concerns about Xinjiang cotton quality, recent weather issues in US where more than 70% of the cotton is still on field and uncertain Indian production. These concerns suggest there might be a demand for Australian old crop as the redistribution of the unused Chinese import quota of 100k MT should reach the mills soon. The most negative fundamentals in the market is lack of demand. Even though the current weather issue is a concern, cotton price should trade sideways unless there is a significant increase in demand. The demand for synthetic fibre is also very low, prices decreasing on the back of mounting stock pile up. Overall the future doesn’t seem to have much substance to push above .66c at the same time not below .60c as the government support/loan programs kick in at this level.

First notice day approaching fast for Dec’15, we suspect funds started rolling their positions already. This may see some downward pressure on Dec’15 this week. 

All indicators showing current years crop quality has improved significantly from the flood damaged 2014 crop.