Cotton Australia

• Australia’s cotton is sold into a world market, competing against around 75 other cotton producing nations for its share of global cotton trade.

• For the last two seasons, the Australian cotton industry has generated in excess of $2.5 billion in export revenue, making it one of Australia’s largest rural export earners and helping to underpin the viability of many rural communities.

• The total international trade in cotton is estimated to be $12 billion. Africa's share of the cotton trade has doubled since 1980. (source: Cotton Incorporated, 2011)

• Australia is the fourth largest exporter of cotton in the world (behind USA, India and Uzbekistan).

• In 2009/10 Australia’s cotton exports increased by approximately 76% to 460,000 tonnes, compared to the previous year. (Source: ICAC, 2011)

• In 2009/10 China, Indonesia, Thailand, Bangladesh, Korea and Japan were the main markets for Australian cotton. (Source: ICAC, 2011)

• Australia exports cotton seed 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.

• Australia’s growers produce very high quality cotton with low contamination that is in demand on the world market and commands a premium price.

• The price that a grower receives for each bale of cotton produced is set by the world market.  This price 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 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 long-term average price for Australian cotton (21 years, 1991 – 2011) is $460 per bale. (source: Rabobank, Cotton Conference Presentation 2012)

• In recent times (2010/11) the cotton price has been very volatile with prices ranging from $450 per bale up to $1000 a bale in Australia.

• In 2011, world cotton prices peaked at their highest recorded levels ever.  The Bremen CFI Index, one of the three most important price indices for cotton trade, stood at 246.15 cents/lb on 8th March. This was a previously unreached level and almost two and a half times higher than at the beginning of the 2010/11 season. (source: ICAC 2011)

• 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, for a number of reasons:

o They honour their sales contracts regardless of price movements and merchants honour their purchase contracts, regardless of price movements
o Production reliability is high, crop abandonment is extremely low and yields are very high
o (source: Australian Cotton Shippers Association, Cotton Conference Presentation 2012)

• Australian cotton growers are market savvy, understand the components that make up their price, monitor price movements and take action at price levels that suit their businesses. (source: Australian Cotton Shippers Association, Cotton Conference Presentation 2012)