Namoi Cotton Co-Operative Ltd said on Tuesday it expected a sharp decline in Australia's 2007 cotton crop due to drought in the country's eastern states and low market prices.
"Challenging agronomic conditions" and low cotton prices were likely to result in a 2007 crop of about 1.6 million bales - 38 percent less than the 2006 crop, it said.
Namoi, one of Australia's largest cotton processors, said it would produce about 475,000 bales in 2007. "The 2007 season will be negatively impacted by the continuing drought conditions," it said after reporting an 10.8 percent decline in half-year net profit to A$24.0 million ($17.7 million) compared with a year earlier.
Government forecaster Australian Bureau of Agricultural and Resource Economics put the decline in the 2007 crop at 32 percent. Sector analysts have said cotton prices were being pressured by the absence of sustained buying by top consumer China and the continuing US harvest, which was starting to flood the pipeline with supplies of new-crop cotton.
New York Board of Trade's December cotton contract declined 0.73 cent to end at 49.72 cents per pound on Monday, moving from 50.50 cents to a new lifetime low of 49.70 cents. Australia exports around A$1 billion worth of cotton a year, making it the world's third-biggest exporter after the United States and Uzbekistan.
Eastern Australia has already suffered five consecutive years of below-normal rainfall, with last August the driest on record. Some 92 percent of New South Wales, the most populous state, is considered officially in drought. Namoi ended 1.6 percent up at A$0.63, slightly ahead of a 1 percent gain in the wider S&P/ASX200 index.
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