Cotton production in Australia is set to plummet as much as 50 percent next season as drought curbs water supply in the world’s third-biggest exporter, according to growers and shippers.

Output may be between 2 million and 2.5 million bales in 2014-2015 from about 4 million bales this year, according to Cotton Australia, the Sydney-based producers’ group. Production may total about 2.25 million bales, according to the Australian Cotton Shippers Association, which promotes exports. An Australian bale weighs 227 kilograms (500 pounds).

Australian farmers may plant less after a record drought in Queensland and dry conditions in parts of New South Wales, the biggest producer, according to Cotton Australia Chief Executive Officer Adam Kay.

"Unless we get some pretty serious rainfall in the next two to three months, we’re going to see a reduction in area due to lack of water," Kay said in an interview on the Gold Coast yesterday, giving the crop estimates for this year and next. "Dryland producers would probably be a little nervous about the price and would be looking at the price for small grains and doing the gross margins comparisons."

About 75 percent of Queensland is in drought, near the record 79 percent seen in March, according to the state government. Most of the state recorded little or no rain in July, according to the Bureau of Meteorology. New South Wales had its driest July since 2002, according to the weather bureau.

Australia is on watch for an El Nino, which can bring below-average rain over southern and eastern inland regions, the bureau said on July 29. There’s a 50 percent chance of the weather pattern this year, with the majority of models predicting the event is likely for spring, which starts in September, it said. Australian farmers plant cotton in spring.

Australia’s cotton exports will probably drop 11 percent to 870,000 metric tons in the year started July 1, the Australian Bureau of Agricultural and Resource Economics and Sciences estimated in June. That’s the equivalent of 3.8 million bales. The Canberra-based bureau estimated output will decline 9.9 percent 820,000 tons, or about 3.6 million bales.

Source - http://www.agweb.com/