Economics of Cotton in Australia

  • Australian cotton is sold into a highly globalised market, competing against around 100 other cotton producing nations for its share of global cotton trade
  • The Australian cotton industry has earned a reputation as a reliable supplier, with fast shipping times to export destinations, and reliable delivery
  • Australian cotton is in high demand and can attract a price premium due to its high quality characteristics, reliability and a proven track record in meeting manufacturer and consumer needs
  • Australian cotton is of consistently high quality, almost zero contamination and offers short shipping times from Australia’s ports to Asian markets
  • Australian cotton is exported through ports in Brisbane, Sydney and Melbourne
  • China, Indonesia, Thailand, Korea, Bangladesh, Vietnam and Pakistan were the main markets for Australian cotton in 2013 (source: ABARES 2014)
  • Australia is the third largest exporter of cotton in the world (behind the US and India)
  • More than 1.25 billion kilograms of cottonseed was produced in Australia in 2013/14 source: ABARES 2014). Australia exports cottonseed to Japan (crushed and cattle feed), Korea (crushed), China (crushed) and the USA (dairy feed) depending on parity price and the value of the Australian dollar. Seed exports were valued at AUD $255 in 2014 (source: Australian Grown Cotton Sustainability Report 2014)
  • Over a five year average between 2009 and 2014, the Australian cotton crop is worth AUD $2 billion annually, underpinning the viability of 152 rural communities
  • Cotton growers sell their cotton to one of a number of independent Australian merchants who then sell it into the world’s markets, aiming to get the best price possible.  It’s a very competitive and transparent market
  • The price that a grower receives for each bale of cotton produced is set by the world market which is dependent on a number of factors including the state of the world economy, agricultural politics, fashion trends, synthetic fibre price, weather, natural disasters and cotton’s own supply and demand
  • Cotton prices have ranged from AUD $300 to $600/bale. The all-time high was $758/bale in 1995 while the all-time low was $233/bale in 1986. Prices were also very high in 2011 due to a short term shortage of cotton in exportable locations, reaching an average price of $664/bale. The average price for 2009-2014 has been $396/bale. Between 2011 and 2014, prices have hovered around $440/bale (source: Australian Grown Cotton Sustainability Report 2014)
  • Cotton lint makes up about 42% of the picked cotton by weight, and contributes about 85% of the total income from a cotton crop. The other 15% of income is from cottonseed.
  • There is a forward market for cotton in Australia where growers can sell their cotton at a fixed price, up to three years ahead (source: Australian Cotton Shippers Association, Cotton Conference Presentation 2012)
  • Australian cotton growers have an excellent reputation for good business practice in the world market due to contract sanctity and reliable counterparties and strict adherence to International Cotton Association (ICA) rules
  • Australian cotton growers are market savvy, understand the components that make up the price of their cotton, monitor price movements and take action at price levels that suit their businesses (source: Australian Cotton Shippers Association, Cotton Conference Presentation 2012)

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© Cotton Australia 2016. This material is licensed under a Creative Commons Attribution-Non Commercial 4.0 International License (CC BY CC BY-NC 4)