Cotton joined the list of Australian crops suffer production
downgrades thanks to heat and dryness as Namoi Cotton lowered its forecast for
the harvest to well below official estimates.
Namoi Cotton, in which Louis Dreyfus is a top shareholder, pegged at
3.0m bales the 2016-17 Australian cotton crop, harvesting of which is
The estimate took the crop 100,000 bales below Namoi's previous
forecast, made three weeks ago, and further beneath estimates from other
commentators, with both Australia's Abares commodity bureau and the US Department
of Agriculture putting it at 4.4m bales.
Industry group Cotlook two weeks ago put the harvest at 975,000 tonnes
hot and dry'
Namoi said its estimate, which followed the ginning of some 50-60% of
the harvest, reflected the setback to crops from hot and dry weather, albeit conditions
earlier in 2017 than the more recent heat blamed for threatening establishment
of winter grains and canola.
"Production yields have continued to suffer primarily due to the exceptionally
hot and dry conditions that most cotton-growing areas were exposed to over the
January and February period," the group said.
Heat and dry conditions have continued to prompt downgrades to
Australian winter grain prospects for the 2017-18 harvest, undertaken later in
the calendar year,
Tobin Gorey at Commonwealth Bank of Australia said on Wednedsay that
while "a smattering of rain will fall in some winter crop regions… Sod's Law in
action, the regions that need it most are likely to see little rain".
Australian sugar production expectations, meanwhile, have been
curtailed by damage caused by Cyclone Debbie in March.
Namoi added that it was now expecting to gin 1.05m-1.1m bales of this
year's harvest, including crop handled by joint ventures, a small downgrade on
the 1.05m-1.15m bales it forecast last month.
However, that would equate to a market share of 27-28%, ahead of its average
share of 25.6% over the past five years, with Olam second on 22.2%, and Auscott
third at 17.3%.
The estimate for lint marketing volumes was trimmed to 600,000-650,000
bales, from 600,000-700,000 bales, although the group said its cotton seed
business now looked set to trade more than 290,000 tonnes, an upgrade from a previous
forecast of 260,000 tonnes.