algodão / cotton
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US-China trade war favors Brazilian cotton exports

Oct, 28, 2019 Posted by Sylvia Schandert

Week 201944

The trade war between the United States and China has been impacting all international trade. On October 15, for example, the International Monetary Fund warned that the trade war will slow 2019 global growth at its slowest pace since the 2008 and 2009 financial crisis.

Given this information, Datamar, a consultancy specializing in the analysis of foreign trade via maritime modal in South America, conducted a study on the effects of trade war for some of the main Brazilian commodities, such as cotton.

“Since July 2018, US cotton has received a 25% surcharge in China. This has opened opportunities for other exporters of this commodity, mainly Brazil and Australia. And unlike soy and pork, which have had the surcharges reversed for US products, the cotton surcharge continues,” says Andrew Lorimer, director of Datamar.

According to the executive, the international scenario combined with a record crop in 2019 has created an interesting opportunity for Brazilian cotton exports. “It remains doubtful how long this opportunity will last, as a Chinese review of this surcharge could change the market again in a very short period of time,” he adds.

It is worth remembering that Brazil produced about 2m tons of cotton in the 2018/2019 crop, 400,000 tons more than in the previous crop. The domestic consumption of cotton is about 700,000 tons and the surplus needs to be exported.

The US was the main supplier of cotton to China and with the trade war this position came to be occupied by Brazil and Australia. As a result, Brazilian cotton exports increased by 134% in the accumulated Jan-Aug compared to 2018, reaching 623,000 tons. In August 2018, China was responsible for the purchase of 5,900 tons of Brazilian cotton, equivalent to 2% of all exports of this product. By the same period of 2019, China had already purchased 150,000 tons, and became responsible for buying 24% of all cotton exports (MDIC data).

This and other analyses of Brazilian foreign trade and the entire east coast of South America and Chile are available to Datamar customers through DataLiner, the company’s flagship. DataLiner is a database that provides a complete view of South America’s foreign trade maritime flow. It includes information about shipowners, ships, ports and terminals, exporters and importers, as well as shipped goods and their origins and destinations.

Datamar recently launched intuitive dashboards to merge DataLiner information with a variety of other sources of information, resulting in an analytical tool that is easier to understand and handle.

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