Australia may benefit from rising tensions between the US and China. Increasing tariffs see Chinese producers turn to alternative sources of cotton. Import tariffs on US cotton into China now reach 26 per cent within the 8,90,000 tons quota, and up to 65 per cent for out-of-quota imports. This could provide an opportunity for Australian cotton.

Australia exported 872,000 tons of cotton in 2017-18. A two per cent increase is forecast for Australian cotton exports in 2018-19. Opportunities could arise for Australian agribusinesses should China lower tariffs for countries outside the US. In July, China imposed a retaliatory 25 per cent additional import tariff on US raw cotton.

The area planted under cotton in Australia is forecast to fall 50 per cent in 2018-19 due to below-average rainfall. But returns to Australian cotton growers could reach 16-year highs. The cotton industry in Australia employs 15 times as many people as grazing does. Australian irrigated lint yields are now the highest of any major cotton producing country in the world.

The Australian cotton industry produces about 9,00,000 metric tons of cotton a year, with almost 100 per cent of this exported.