Brazil set to be leading cotton exporter after 85% surge in shipments

With about a month left in the 2023/24 market year for US cotton, it is now evident that Brazil will become the global leader cotton exporter for the first time, ending the decades-long dominance of the United States.

According to Miguel Faus, president of the National Association of Cotton Exporters (Anea), this achievement has been realized sooner than expected. Brazil’s exports have surged by approximately 85% this year due to a bumper crop and strong demand from Asian countries, including China. In contrast, U.S. production has declined due to climate issues.

“Brazil achieving the status of largest cotton exporter happened sooner than we anticipated. The primary reason is the broke crop in the US, contrasting to the increased output in Brazil—a combination of these factors,” Faus told Reuters.

Mr. Faus also referenced data from the U.S. Department of Agriculture (USDA), which recently revised its forecast for Brazilian cotton exports upwards by 300,000 bales to 12.4 million bales. Simultaneously, the USDA reduced its forecast for U.S. cotton exports by 500,000 bales to 11.8 million bales for the 12 months spanning from August 2023 to July 2024.

In the 2023/24 season, Brazil had already surpassed the United States in cotton production, according to the USDA, ranking third globally behind China and India—a position expected to be held in 2024/25.

The USDA also noted that Brazilian exports have been stronger than anticipated, predicting that Brazil would surpass the U.S. as the largest exporter in 2023/24. This marks a significant shift, as the U.S. has held the top position since the early 1990s.

The following chart uses DataLiner-derived data to dive into cotton exports, in containers, from Brazil between Jan 2021 and Apr 2024.

Cotton Exports in Containers | Jan 2021 – Apr 2024 | TEUs

Source: DataLiner (click here to request a demo)

Faus stated that Brazil has the potential to grow even further in the next export year (2024/25), with a harvest expected to set a new record, and another increase possible in 2025/26. “Things are going well. I think that in the medium term, Brazil will consolidate its leadership,” he said, highlighting the quality, traceability, and productivity of Brazilian goods.

For 2024/25, the USDA projects the U.S. will slightly outpace Brazil in exports, with 13 million bales from the crop currently being planted. However, the competition will be intense.

Faus noted that it is too early to determine the impact of Brazil’s new market position, which remains “very competitive.” “This leadership does not necessarily give us an advantage. We must remember that the global reference price for cotton in New York reflects the price of cotton in the U.S., not Brazil,” he explained.

He added that the status of Brazil as the largest cotton exporter will have less market influence compared to its dominance in coffee production and exports. “In cotton, the forces are more balanced… but of course, if Brazil increases or decreases production, the market pays attention,” he commented.

Record Production and Export

Brazil’s 2023/24 harvest season ends a month before the North American one, in June, and the country is expected to achieve record exports of around 2.6 million tonnes, compared to 1.396 million tonnes in the previous cycle, Faus estimated.

As of last Friday, government data showed shipments totaling 2.538 million tonnes, already surpassing the previous annual record set in 2020/21, when Brazil exported 2.414 million tonnes.

This new record took several years to be achieved due to the pandemic and market conditions that affected prices in the sector. Now, with the help of favorable climate conditions, the sector has returned to consistency, according to the Anea president.

Brazilian exports have also rebounded due to increased demand from countries such as Pakistan and Bangladesh, which had purchased less in the previous cycle due to financial difficulties in opening letters of credit. This trend contributed to exceeding initial expectations of 2.4 million to 2.45 million tons.

Among the main markets for Brazilian cotton are China, Vietnam, Bangladesh, Turkey, and Pakistan.

Source: MSN

Click here to read the original news piece: https://www.msn.com/pt-br/dinheiro/economia-e-negocios/brasil-lidera-exporta%C3%A7%C3%A3o-de-algod%C3%A3o-pela-1%C2%AA-vez-com-salto-nos-embarques-diz-anea/ar-BB1oWC5I

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