With US production sharply declining and with the Australian dollar looking to finally be at the end of its uptrend, it all spells for optimism for local growers.

Based on the changing world dynamics, Mr Imray tipped that the 2009 crop would see prices in the $400-$520/bale range, with early 2009 perhaps offering better pricing.

In 2010, the prediction is for prices ranging from $420-$540, with all these figures based on certain exchange rates and futures predictions.

"I see cotton is a strong industry and cotton has improved a lot over the last few years, especially in the 12-13 years I have been doing it," Mr Imray said.

"The price has a significant upside – just add water."

But the new days of the cotton market won't be without their problems.

"From 2008 and into 2009 is that merchant competition will decline," Mr Imray said.

"A decline in production, skinny margins and problems from the ICE age (International Continental Exchange) will lead to a change in merchant business models and the way they operate in our market.

"I see the merchants doing more spot business, with more business done during picking or after."

For instance, in 2005 there were 12 fully fledged merchants in the market, including niche operators.

Today, there is about six, with three others having a presence in the market.

"We have had significantly reduced reduction which obviously makes planning difficult for all players in the industry," he said.

"Some merchants will stay mothballed until we see an upside in production."

However, he said this could be a short term situation lasting 12-24 months, if the industry recovers.

"Where moisture is available, cotton will reclaim ground back from grain, particularly on the Downs.

"At planting last year sorghum was $370/t and this year is less than $240, so significantly lower values.

"A return to 2.5-3 million bale crop will put our industry under significant resource pressure.

"It could leave everyone gasping for a while. But it will also bring new opportunities and could bring new merchants."

* Extract from Australian Cotton Outlook, out September 11.