Cotton

Cotton growers seize upon short term spike in prices

31 May 2017

Gregor Heard: The Land 31 May 2017

AUSTRALIAN cotton producers, especially those on irrigation, have seized upon a market spike to lock in attractive prices on offer earlier in the month.

A short term spike in global cotton prices, both for prompt delivery and on nearby futures contracts, was sparked by production uncertainty and eager buyers.

It led briefly to prices of up to $580 a bale for Australian old crop cotton and also presented opportunities for growers starting to market the 2017-18 crop, with forward prices topping $550 a bale.

Wayne Newton, AgForce grains section president, said farmers were alert to the window of opportunity presented by the market climb.

“The prices have come back since but people have closed their exposure to the old crop and where they can they have locked in some of the new crop at these high values,” Mr Newton said.

He said irrigated cotton producers in particular had been tempted to market at least part of expected new crop production.

“They have that relative certainty about production so they’ve definitely seen an opportunity at the price levels that were on offer.”

Commonwealth Bank commodity analyst Tobin Gorey said the price spike had virtually run its course.

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