Cotton

GVP $1.97 billion est, down 8% yoy
Total production steady at 3.44 million bales
Strong yields averaging 10.25 bales/ha

Seasonal conditions were generally favourable for cotton production, with total production reaching the third highest level on record. As a result, 2024-25was the fourth consecutive year of significantly above average production. While overall seasonal conditions were favourable, some late flooding events in Northern NSW resulted in quality downgrades. Chinese domestic production increased sharply in 2024-25 leading to less demand for imports, particularly from the US. Cotton prices traded in a narrow sideways band for most of the year, however Australian cotton spot prices traded at a premium to US futures prices for most of the financial year. All up the cotton industry was valued at an estimated $1.97 billion, making cotton the third highest valued primary industry in 2024-25.⁷⁶

Production

Despite total available General Security (GS) and High Security (HS) regulated river water declining by approximately 17.6% year on year, cotton production remained resilient in 2024-25.⁷⁰ ⁷¹ Total cotton plantings remained near steady on the year prior with 335 thousand hectares planted, 20% above the 10 year average.³ Plantings were supported by good subsoil moisture, robust on farm storage levels and GS allocations that were 21% above 10 year average levels.⁷⁰

The growing season was generally conducive to strong yields, with above average yields in all valleys. Southern valleys particularly benefitted from favourable seasonal conditions and resulting yields, while statewide average yields edged up marginally to 10.5 bales/ha to deliver a 3.44 million bale cotton crop.³

Unfortunately, the season experienced a late set back as ex-Tropical Cyclone Alfred impacted cotton crops in Northern NSW and Southern Queensland, leading to discolouring related quality downgrades.¹⁵⁰

Five-year average cotton production levels have reached a new record high despite this including a below average production season in 2020-21 reflecting steady productivity and yield gains being made by the industry, as well as an increasing footprint in Southern NSW.³

NSW Cotton Production

Production
5 Year Moving Average Production

Download data (.XLSX)

Source: ABARES (2025)

Macroeconomic and Price

Chinese cotton production was estimated to have increased by 17% year-on-year to 32 million balesⁱ in 2024-25. This was China's largest crop in 11 years. This major increase in production meant that Chinese production accounted for almost 27% of global production compared to the 10-year average of 24%. Chinese import market demand softened with as the market was able to source more domestic production, meaning Chinese imports fell a hefty 66% year-on-year to make up 12% of global imports which was an 8 year low.¹⁷⁷

However, with global production reaching a seven year high, other key importer markets stepped into fill the void left by China, most notably Pakistan, India, Egypt, Central America, Thailand and Vietnam being the major sources of increased demand. Vietnam in particular continues to grow as a source of demand for both imports and domestic consumption, both of which hit record highs in 2024-25. Notably, this increased Vietnamese demand has been generated by a shift in Chinese milling capacity to Vietnam in recent years. Global end use demand has underpinned the growth in Vietnamese milling capacity, with the EU and US shifting a portion of fabric, apparel and garment orders away from China and Bangladesh in recent years towards Vietnam.

Foreign demand for US cotton has also declined over the past four seasons partly owing to strained US and China foreign relations, including ongoing tariff impositions by each country. US exports accounted for 28% of global trade in 2024-25 compared with 33% average for the 3 years prior.¹⁷⁷

This painted a relatively subdued picture for cotton prices over the course of 2024-25, with US futures trading within a narrow sideways band for the majority of the year. However, increased supply from China and US and a softer Australian Dollar has lent support to Australian cotton crop pricing which has been generally traded at a premium differential to the US futures market (i.e. basis) in the vicinity of $40-$80/bale.¹⁵⁰ The pricing premium suggests strong import demand for generally higher quality Australian cotton.

Cotton Futures & Spot Prices

US Futures #2
Local Spot Price

Download data (.XLSX)

Source: INVEST (2025) , RainAg (2025)

Trade

Australian cotton exports fell for a second consecutive year, down 17% year-on-year to $3.44 billion. Despite the fall, exports remained relatively strong, ending the year 43% higher than the 10 year average. Cotton lint export volumes fell 9.7% year-on-year, while the average export unit price also declined 8.1% year-on-year on generally softer global demand in key markets.¹⁵⁵ State level export data has been unavailable in prior years, however as nearly all cotton is exported, NSW cotton exports are estimated at $2.19 billion for 2024-25.^x

Export demand to Vietnam, which between 2021-22 and 2023-24 was Australia's largest export market, has waned over the last two years. Australia and the US were the largest exporters to Vietnam in 2023, although both countries lost significant market share to Brazil which increased exports by 165% in 2024 owing to an apparent 11% discount in export unit price.¹⁷⁵.

The decline in exports to Vietnam was partially offset by increased exports to India, up 157% year-on-year to record levels of $439 million. Meanwhile, exports to other destinations remained relatively stable. Exports to India are beginning to benefit from the Australia-India Economic Cooperation and Trade Agreement which came into force on the 29 December 2022 and will effectively remove tariffs on cotton after 3 years.⁷²

Outlook

Opening GS water allocations for 2025-26 as at July were generally at the lowest level of the last three to four years depending on regulated river water source. The Southern Murray Darling Basin had the most pronounced water allocation decline, estimated to be 51% lower compared to the same time last year. In the Northern Murray Darling Basin, opening GS allocations were down 8% over the same time period.⁷⁰ While opening water balances are generally lower year on year, flood events in autumn and late winter in the Northern Basin have improved off farm and on farm water availability, with water allocations forecast to also increase leading into sowing.¹⁷¹ As a result and without significant spring rainfall in Southern NSW, cotton production is expected to favour Northern NSW in 2025-26.

Global production is forecast to decline by approximately 2.5 million balesⁱ, or 2% year-on-year in 2025-26, with reductions in supply expected from the US, Australia, India, Turkey and Uzbekistan. Global consumption is forecast to remain stable in 2025-26 at 118 million balesⁱ, underpinned by strong consumption within China, and will thus outstrip global production by 1.2 million balesⁱ.¹⁷⁷ As a result, global ending stocks are forecast to decline by 1.5%, which is anticipated to lend some support to global cotton pricing over the year ahead.¹⁸⁴