The major change in cotton trading over the last few years has been the emergence of China as the world’s largest cotton market and the largest market for Australian cotton, reports Bob DallÁlba, chairman of the Australian Cotton Shippers Association.

Addressing the ACGRA Cotton Conference on the Gold Coast, Mr DallÁlba said in 2004 China took 15 per cent of Australia’s crop, but in 2005 exports to China were over 1 million bales or 36 per cent of production.

“China is expected to import a record 20 million bales in the current marketing year, with total cotton consumption estimated at 51 million bales or almost 1 million bales per week. It is likely that China will be Australia’s most important market for the foreseeable future,” he said.

He noted that some mills in Japan, Korea, Indonesia and Thailand have, over the years, paid a premium of US 4cents/lb for Australian high grade cotton versus Fibremax US varieties, and US 7-9cents/lb premium versus Brazilian cotton in this current year. “We need to develop that same loyalty to our product in China,” he said.

Mr DallÁlba believes customers buy Australian cotton because Australia is the only country that can land cotton in major markets within 2-3 weeks of letters of credit being opened; because the percentage of bales contaminated by foreign matter is lower than for most of its competitors; and because seed breeders have been able to keep pace with the increased fibre specifications demanded by customers.

“The real issue we have now is micronaire and the fact that the percentage of our cotton falling in the premium micronaire range has fluctuated widely in the last six years. Although we can blame climatic factors, high mic provides our competitors in Brazil and the US with opportunities to replace Australian cotton in established markets.”

He said the combination of drought and low cotton prices has changed the market dynamics where growers now wait until late in the year of delivery to fix prices. Merchants are then restricted to selling significant volumes when growers are prepared to sell.

 “This change has created periods where our spinning mill customers are unable to purchase Australian cotton or only able to purchase it at extremely high prices, providing ready made access for competitor growth.”

He praised the commitment of Australian growers to Best Management Practice (BMP) and said shippers have long supported the need for a similar program beyond the farm gate.

“In the future, I am confident that our plant breeders, researchers and agronomists will develop varieties and growing techniques that will make Australian cotton less variable, and fulfil the fibre characteristics required by our spinning mill customers.

“Building on our earlier plant breeding success, the likely availability of new elite cotton varieties like Sicala 350B presents us with an opportunity to produce an Australian cotton that really is superior to our long staple upland competition,” he concluded.