Dunavant rubs crystal ball on cotton outlook

01 September, 2004

___Bill Dunavant III, President of Dunavant Inc., Memphis Tennessee, one of the world’s leading cotton ginners and marketers, is projecting continued low cotton prices on the back of record world production._

Speaking on the weekly CSD Web on Wednesday video, Mr Dunavant said Australian growers would be the first in the world to plant cotton in October, at a time that’s not very optimistic for prices.

“Quite frankly, we’ve been looking for three months waiting for one of these crops in the world to fail and they haven’t, in fact all of the crops right now, while they are still in the field in the Northern Hemisphere, look quite steady and quite good.

“Initially, when the crop was planted in the United States we were looking at a 17.5 million bale crop maybe 18.5 on the top side, but we’ve had one of the best growing conditions in history in the US and the crop for this time has the best condition report of any US crop in history, and I think it’s going to push 19 million bales for sure,” he said.

He warned Australian growers about rising production in Brazil, which has the opportunity this year to produce in excess of five million bales, and maybe in ten years 10 million bales, which would make Brazil the third largest exporter in the world.

“I was in Brazil two weeks ago and every farmer down there talks about wanting to be like Australia with their yields, but more specifically their quality. The fact of the matter is, and the reality is, the Brazilian farmer can produce cotton a lot cheaper than the Australian farmer.

“I think the Australian farmers need to get on the front foot, they don’t need to rest on their laurels of what they’ve done in the past, and especially with no water they need to think to the future, and they need to be ready for the challenges ahead and the biggest challenge I see ahead is going to be Brazil.”

In relation to possible future cuts in farm subsidies in the US, he said these would not occur (if any) until 2007

“I do think we’ll see a decrease in (cotton) production, but agriculture in America is just as important as agriculture here in Australia. It’s a socioeconomic issue in America. We will support our farmers; we will preserve our food and fibre supply. Will it become somewhat smaller? Perhaps it will,” he said.

Commenting on future trends in world production and consumption, Mr Dunavant said over 76 per cent of all the cotton produced and consumed in the world is in China, the US, Turkey, India, Pakistan, and Brazil.

“It doesn’t mean that we’re not going to have an export market for Australian cotton, it just means that those countries are going to produce it and consume theirs first before going to the international market.

“It potentially is going to push some of the bigger exporters like the United States, which traditionally exports from October to March, it’s going to push them out a little further to compete with Brazil and Australia.

“Having said that, one of the largest importers of cotton is Indonesia. Indonesia is in Australia’s backyard but …Indonesia this year has not had the normal supply of Australian cotton and our company has been selling them cotton from West Africa and Central Asia,” Bill Dunavant said.

Further Information: *"Robert Eveleigh**, John Marshall, Craig McDonald or David Kelly":showstaff.asp?staff=1