Australian cotton output, the world's third largest source of the fibre, will likely be boosted in the coming year by recent heavy rains across the south-west of tropical Queensland state, an industry leader said on Monday. Some cotton crops in central Queensland had been damaged by the rain but overall the picture was positive because of the rains, said Bob Bell, Chief Executive of Australia's largest cotton grower, Namoi Cotton Co-operative.

"The rains will certainly benefit the crops in south-west Queensland, particularly for 2011" said Bell. He said the 2010 crop was expected to produce 1.65 million bales compared with 1.5 million bales harvested last year. (4.4 bales equal one tonne) "But it is really that the benefits will be seen in 2011 when there could be a 2 million bales crop," said Bell.

He said irrigation dams in much of Australia's cotton growing regions were close to full although some dams in northern New South Wales state still needed more rain. Cotton prices have been rising as the global economic recovery gathers pace. Australia's government commodities forecaster last week estimated the world indicator price for cotton would rise by 21 percent in the 2009/10 August to July year from the year before when prices nose-dived because of the global financial crisis.

Namoi Cotton's Bell said Australian growers were likely to plant more acres in cotton rather than other crops such as wheat in response to the expected higher prices. "The recent market rally is affecting Chinese consumption and global stocks are reducing so we're likely to see increases in dryland cotton as it has better economics associated with it than other broadacre crops," said Bell.

SUGAR ALSO BOOSTED The outlook for the sugar industry has also been boosted by timely rains in eastern Queensland where about 95 percent of the country's crop is grown even though the harvest is not until after mid-year. Queensland Sugar Ltd, the company that exports most of Australia's cotton, has lifted its estimate of the next harvest nearly 7 percent.

"We were looking at 2.9 million tonnes of raw sugar available for export but that's been pushed up to 3.1 million tonnes," said Alan Winney, chairman of Queensland Sugar. He said the outlook for sugar prices remained positive but was largely dependent on India's annual monsoon rains from June through September which are crucial for farm output.

"If we don't get a strong monsoon then the world's going to be in another sugar deficit situation - there won't be enough sugar to go around and the price is going to have to ration demand," said Winney.

Demand for sugar as outstripped supply because of shortfall in production last year in India, the world's second largest producer of the sweetener and largest consumer, and a rain affected harvest last year in Brazil, the world's largest sugarcane producer. Sugar merchant Czarnikow estimated late last month estimated the 2009/10 deficit at 14.8 million tonnes, approaching an estimated record deficit of 15.6 million tonnes in 2008/09.

Source: Reuters