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Time running out for rains to revive Australia's cotton crop

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Australia's cotton production, which officials foresee could hit its second-highest level on record, could rebound by less than expected, thanks to dry weather which has already cut expectations for sorghum output.

While eastern Australia, where the country's cotton is grown, did receive some rainfall over the weekend, some commentators cautioned that it was too little to refresh crops sapped by a dry and hot conditions, while a help for grain harvesting, hampered development of summer crops.

"Forecasters say some of Australia's cotton areas benefited from weekend rain but much more is needed," said Tobin Gorey, at Commonwealth Bank of Australia.

"The clock is running down though on the period in which Australian crops can still benefit from increased moisture."

'Critical rains'

The comments follow a caution last week by Abares, the official Australian crop bureau, over the potential hangover from three months of "drier and warmer than average seasonal conditions in the cropping regions of Queensland and northern New South Wales".

"The timing and quantity of rainfall over the remainder of the season will be critical to the ongoing development of dryland summer crops", the bureau said.

While flagging that "favourable supplies" of water in management systems means that the recent heat has "not adversely affected prospects for irrigated cotton", sowings of the crop on non-irrigated land been particularly high, surge by 248% to 209,400 hectares.

'Exceptionally hot and dry'

Still, the bureau stuck by an estimate of 1.03m tonnes for Australia's 2016-17 cotton production.

And it received support from seed-to-marketing group Namoi Cotton, in which Louis Dreyfus is a top shareholder, which stuck by a forecast that Australia "will still produce a little over 4.0m bales" of the fibre.

The group, based in New South Wales, flagged "patchy" rainfall, and highlighted "exceptionally hot and dry conditions existing across most cotton-growing areas".

However, cotton sowings, which the group pegged at 472,000 hectares, had beaten Namoi's previous forecast.

Company shake-up

The comments by Namoi - which expects to gin 1.1m-1.2m tonnes of Australia's next cotton harvest, equivalent to more than one-quarter of the crop – came as it unveiled further progress in plans to switch the group to having jkust one class of shares, rather than the existing more complex structure.

"We are now starting the detailed documentation drafting required before regulatory approvals can be sought," said Namoi chairman Stuart Boydell, adding that it was seeking meetings with shareholders, including growers, to approve the revamp.

The group is 13.0% owned by Louis Dreyfus, which bought its stake three years ago for Aus$3.65m.

And Tobin Gorey, at Commonwealth Bank of Australia, also warned on yields this week, with little time to recover prospects.

"Forecasters say some of Australia's cotton areas benefited from weekend rain but much more is needed," Mr Gorey said.

By William Clarke and Mike Verdin

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