Australia-Drop in Cotton prices.

AUSTRALIA-DROP IN COTTON PRICES.

Cotton prices have again fallen to low levels as the global financial crisis dampens consumption, however, a weaker Australian dollar at the end of the year provided some good pricing opportunities for growers.

The sharp decline in the Aussie dollar has countered lowered international cotton prices and allowed for some profitable pricing breaks for growers.

Producers who took advantage of forward contracts before the cotton price collapsed sold a good portion of their 2009 crop at prices above $450 a bale.

But 30 to 50 per cent of the Australian crop is still to be sold as local cotton trades at $365/bale.

Intercontinental Exchange (ICE) futures have declined from a late January peak of US52.47 cents a pound and May 2009 futures have settled at a three-month low of US41.01c/lb.

The latest decline has made US cotton more competitive, and as a result US cotton sales of more than one million bales were recorded in the last two weeks of February.