Cottonseed traders are warning of significant supply shortages in 2020, but prices are unlikely to hit the highs of around $800 a tonne seen early this year, due to low herd and flock numbers.
A severe water shortage throughout key cotton growing regions in Queensland and NSW has forecasters predicting a 2020 crop of just 1 million bales.
That should produce between 250,000 and 260,000t of cottonseed - a long way from the annual domestic demand of 300,000 to 500,000t.
Cottonseed is currently trading around $580/t ex-Darling Downs with traders noting an increase in inquiry in recent weeks.
Despite growing demand, Auscott marketing manager, Andrew Donovan, did not think prices would get as high as they did in the peak around February and March.
"The industry isn't out there in terms of cattle - we don't have the herd size," he said.
Mr Donovan said good winter crops in southern NSW, Victoria and South Australia could also help keep a lid on cottonseed prices.
"Those areas are looking better than they did last year so there will be grain available and making its way into those northern markets," he said.
Luke Walker, Alliance Grains, Toowoomba, said there was a limited supply of cottonseed coming out of the northern gins but plenty of stock still available in southern NSW.
"Currently our price is about $150/t over export values so the market is being held up by drought, smaller supplies in the north and the poor outlook for the 2020 crop," he said.
"An inch of rain would see that market slip back."
Mr Donovan said a key question was whether the gins would carry any crop into the new year.
"That will depend on the next six months and the demand we see from grazier and feedlots," he said.
"But while there is demand there the ginners are quite happy to sell. Typically you don't want to be carrying cottonseed because of the nature of the seed and storage."
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