China, US and EU to drive demand for Australian fibre
4 March 2014
Growing global demand for cotton and wool will support world prices and Australian production levels, according to forecasts released today at the ABARES Outlook 2014 conference.
“World cotton consumption is projected to increase over the medium term given the expected income growth in major apparel consuming countries like China, the European Union and the United States,” said ABARES Senior Economist Caroline Gunning-Trant.
“While Australian cotton production is projected to decline over the medium term from a record 1.2 million tonnes in 2011-12 to about 800 000 tonnes in 2018-19, it is still forecast at higher levels than the 15-year average to 2012-13 of 616 000 tonnes.”
Dr Gunning-Trant said that although the world price for cotton is forecast to decline marginally in the short term, returns to Australian cotton growers can be expected to rise given the assumed lower Australian dollar.
”The Australian cotton industry has been set up to produce a high-quality fibre to meet the high end of the cotton export market,” said John Cameron, Monsanto Cotton Grower of the Year in 2013.
“The decisions we're making at the farm level consider what the world wants and that is essential to creating a profitable and sustainable business.”
For wool, stronger demand from the US and EU is projected over the medium term, reflecting an assumed improvement in their economic growth.
“Australian shorn wool production is projected to increase modestly over the medium term, reflecting a forecast increase in flock numbers in response to strengthening sheep and lamb prices and an assumed improvement in seasonal conditions” Dr Gunning-Trant said.
“A higher Eastern Market Indicator price is forecast for wool in 2013-14, with further modest rises in the next few years.”
Presenting at the same session, Australian Wool Innovation's Allan Wang said that Chinese consumers held a very positive view of wool, in part due to its environmental credentials.
“China is fast becoming a wealthier and more sophisticated market,” Mr Wang said.
“Average clothing expenditure in China is expected to grow by 11 per cent annually until 2020, more than 2.5 times the expected growth in the United States - which has projected growth of 4 per cent.”
Mr Wang said that these figures held powerful long-term implications for Australian wool, with China's clothing expenditure expected to surpass that of the United States in 2019.
With a focus on opportunities for Australian agriculture, ABARES Outlook 2014 is being held in Canberra on Tuesday 4 and Wednesday 5 March.