Despite the drought, Brazil is moving toward a “good” cotton crop with higher exports

The drought has already reduced cotton crop potential in Bahia by around 10% this year, while losses in Mato Grosso are still being measured. However, even though these are Brazil’s two largest producers, the sector is still hoping for a “very good” crop with firm exports, as the US is being punished even harder by the climatic phenomenon.

According to exporters, the Brazilian crop should grow by about 10% to about 2.6 million tonnes of lint compared to the previous season. Still, due to the drought, the percentage of increase will not be proportional to the government’s stated 17% increase in planted area.

The president of the National Association of Cotton Exporters (Anea), Miguel Faus, told Reuters that the crop that starts to be harvested should lead to 2.6 million tonnes of yields vis-a-vis 2.35 million in the previous cycle. Nonetheless, this figure will still be a reduction of more than 5% compared to Brazil’s potential of producing 2.75 million tonnes.

“It’s a good number; we have been able to increase the planted area, so the drop occurring is exclusively due to climatic issues. Cotton was selling for a good price; farmers saw increased productivity, among other factors.”

With a crop of this size, Faus said, exports should reach 1.9 million tonnes in the 2022/23 marketing year, which starts in July, versus 1.742 million tonnes estimated until June, which is part of the 21/22 commercial year.

Exports

Despite all the challenges, StoneX market intelligence analyst Marcelo Di Bonifácio Filho believes that Brazil will move from an “excellent” to a “very good” production situation, which still leaves room for export growth.

“Prices remain high in the international market, and potential crop losses in countries like India and the United States favor exporters,” he said.

According to the expert, the Indians had significant pest problems in the 2021/22 crop, which was harvested in the second half of last year, resulting in a shortage scenario for the local textile industry. The issue in the United States, the world’s largest exporter, is the drought in Texas, one of the central producing states, which has caused planting bottlenecks.

The analyst said that, in this context, foreign prices rose from 80 cents per pound in March 2021 to almost 160 cents at the beginning of this month.

See below the track record of Brazilian cotton exports from January 2021 to March 2022. The data are from DataLiner.

Brazilian Cotton Exports | Jan 2021 – Mar 2022 | WTMT

Source: DataLiner (click here to request a demo)

According to Faus, president of Anea, Brazil should face less competition from North Americans but will have to compete with exporters from Australia, which currently ranks fourth in the world and has a growing harvest.

Lockdowns in China have hampered shipments to the country, which have declined in the last three months, in addition to the logistical issues that the sector has already faced since the pandemic began, such as a lack of containers.

Source: Money Times

To read the full original article, please go to:

https://www.moneytimes.com.br/brasil-caminha-para-boa-safra-de-algodao-e-maior-exportacao-apesar-da-seca/

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