A continuation of hot, dry conditions through late December and early January created uncertainty in both the grower and post-farmgate sectors of the Australian cotton industry.
Recent confirmation of a planted area of almost 390,000 irrigated hectares and just over 30,000 dryland hectares had raised hopes that the crop would deliver on early estimates of around 4.2 million bales.
But the recent harsh conditions have increased the risk that water will be stretched for many irrigated producers, and some dryland area could fail to make a crop.
And while ACSA is yet to amend our production forecasts, we are concerned that a possible slide from “trendline yield” - combined with increased abandonment - could see national production potential slip to below 4 million bales.
Given the heavy level of forward sales from growers this season, this could leave some producers overcommitted.
In this instance, it is critical that growers and merchants open a clear and frank dialogue over the state of the individual crop as soon as possible.
Under the terms of a fixed bale supply contract with a merchant, the grower has an obligation to deliver the number of bales contracted within the delivery period specified, and the merchant has the obligation to pay the contracted price on time and in full.
If for some reason the grower is unable to fulfill this obligation, they need to make the merchant aware of the situation so that a workable solution can be implemented.
Clearly, it is too early now to accurately estimate what most crops will produce in two to three months time. But if there is a risk of shortfall, the best course of action is to flag that risk so that all parties are fully informed.
With luck, the weather will turn between now and harvest and any production shortfalls will be kept to a minimum.
Source - http://www.theland.com.au/
Australia - Conditions create cotton concernsA continuation of hot, dry conditions through late December and early January created uncertainty in both the grower and post-farmgate sectors of the Australian cotton industry. Recent confirmation of a planted area of almost 390,000 irrigated hectares and just over 30,000 dryland hectares had raised hopes that the crop would deliver on early estimates of around 4.2 million bales. But the recent harsh conditions have increased the risk that water will be stretched for many irrigated producers, and some dryland area could fail to make a crop.
