Brazil’s 2022/23 cotton exports to fall unexpectedly

Brazil’s cotton exports will fall in the 2022/23 marketing year, an exporter group said, dashing hopes of the country surpassing the United States as the world’s biggest exporter of the natural fiber as Brazilian buyers scramble or turn to alternative suppliers.

In an interview with Reuters on Monday, Miguel Faus, president of the National Association of Cotton Exporters (Anea), described a perfect storm slashing Brazil’s first-quarter cotton exports.

Brazil exported 243,000 tonnes of cotton from January to March, down 56% compared to the same period last year. Foreign sales fell by 59.2% in March alone to 76,000 tonnes, official trade data showed on Monday, April 17.

“A reduction of this magnitude was not in the plans,” said Faus. “It wasn’t expected.”

Anea now projects exports of 1.55 million tonnes for the 2022/23 commercial year, which started last July and ends in June, representing more than a 10% fall from last season. But even that may be optimistic, he said.

Brazil exported 1.725 million tonnes in 2022.

See below Brazil’s cotton exports (HS 5200 and 5201) recorded between Jan 2019 and Feb 2023. The data is from DataLiner.

Cotton exports from Brazil | Jan 2019 – Feb 2023 | WTMT

Source: DataLiner (click here to request a demo)

Faus said the situation reflects the impacts of financial crises in countries like Pakistan and Bangladesh, whose importers are struggling to obtain the letters of credit necessary to keep contracts with trading companies.

“Trading firms are the ones suspending shipments because if the buyer doesn’t have a letter of credit, you simply don’t ship,” Faus said. “Some contracts have been canceled too, a little bit of everything happened.”

Turkey’s earthquake in February also contributed to a decrease in shipments to the country, and, in addition, there was a fall in purchases from key importer China.

“The Chinese are reducing shipments, buying from other origins… They increased their purchases of U.S. cotton a little and reduced ours,” he said.

Market reaction

Despite these bottlenecks, Faus remains optimistic that the market will react accordingly in 2023/24. According to him, sales can pick up the pace from August to September, preparing the grounds for a positive entry into the 2023/24 season, supported by a full harvest in the crops now in development.

“We have a forecast for a large crop… and with the weather cooperating, we believe that the number of cotton production will be closer to 3 million tonnes,” he estimated, citing data from the Brazilian association of cotton producers, Abrapa.

The expectation is more favorable than the National Supply Company (Conab), which projects cotton production at 2.73 million tonnes this year, 7% above the previous cycle.

Thus, Anea’s perspective for exports in the 2023/24 commercial year is 2.3 million tonnes, comfortably surpassing the current cycle’s shipments and approaching the record of 2.414 million obtained in 2020/21.

“In that year, Brazil harvested a record crop and had demand… We can repeat that. We hope that in the next cycle of 2023/24, we will approach that record.”

Source: Isto É Dinheiro

To read the original news reporting, please check: https://www.istoedinheiro.com.br/exportacao-de-algodao-do-6/

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