Australia cotton production likely to see a decline as drought cut back crops and water availability. The area planted to cotton nationwide fell 6.6 percent to 413,000 hectares (1 million acres) in 2013-2014 from a year earlier, the Australian Bureau of Agricultural and Resource Economics and Sciences said in December. Production may drop to 975,000 metric tons in 2013-2014 from 1 million tons, said the Canberra-based bureau, which is known as Abares.

The cotton crop may still be Australia’s third- or fourth-biggest, Murray said. Rain predicted for Queensland in the next week may provide some relief. The last time Australia produced less than 4 million bales was 2010-2011, according to Cotton Australia, which represents the industry.

Output in 2013-2014 may be less than the 4 million bales forecast in September, said Michael Murray, policy manager for Queensland and water at Sydney-based Cotton Australia. That compares with a crop of about 4.4 million bales in 2012-2013, and the record 5.3 million bales harvested in 2011-2012. An Australian bale weighs 227 kilograms (500 pounds).

The group’s forecast adds to signs that drier-than-usual weather in parts of Australia is hurting farm output in the $1.5 trillion economy. About 65 percent of Queensland is in drought after its driest December since 1938, while New South Wales had its driest January since 2003, Bureau of Meteorology data show. Australia may bring forward income assistance for farmers due to the drought, Prime Minister Tony Abbott said today.

Benchmark futures in New York advanced 0.4 percent to 85.90 cents a pound at 10:23 a.m. in Singapore, taking gains this year to 1.5 percent. Goldman Sachs Group Inc. says rising global supply will drive prices to 75 cents in three months. Global stockpiles on July 31 may reach a record 97.6 million bales of 480 pounds, according to the U.S. Department of Agriculture.

Courtesy: Bloomberg