Brazil Serious Lack Of Rainfall, Cotton Production Affected?

Recently, the severe lack of rainfall in Brazil's major crop producing areas has aroused strong concern in the market, which has led to a sharp rise in grain prices in Chicago, as well as market concerns about Brazil's cotton production.

It is reported that the rainfall in Brazil's main crop producing areas from October to November was the lowest in history. In November, the rainfall in Mato Grosso State was only 20-50% of the normal level, and the rainfall in Goias state was less than half of the normal level. By the end of November, soil moisture in Brazil's main production areas had dropped to the lowest level in history. In December, rainfall in Brazil entered the most critical period.

In October and November this year, Brazil's main crop producing areas, Mato Grosso State, soybean and cotton core production areas were extremely dry, which seriously affected the soybean seedling setting. At present, sufficient rainfall was urgently needed to ensure normal growth. Due to the delayed soybean harvest, the end of planting corn and cotton will be delayed until February next year. The rainfall in bayia, Brazil's second cotton producing region, is significantly less stable than Mato Grosso, which is why the local irrigation fields are popular. The current focus is that the rainfall in December will be directly related to the full season crop seeding in Bahia.

This year's cotton planting in Brazil will be completed in December, but the soil moisture in many areas is very low. If the rainfall in December is not good, the emergence of some cotton fields in Mato Grosso State will be a problem. In 2019 / 20, the average cotton yield in Brazil reached a record high of 8.276 bales / ha, increasing for the fourth consecutive year, with part of the increase coming from the improvement of cotton seed quality and the other from good weather.

This year, if the cotton planting area in Brazil is reduced by 10%, and the average yield per unit area returns to 7.5 bales / ha, the cotton production in Brazil is expected to be 10.614 million bales, about 2.3 million tons, which is far lower than the USDA forecast of 2.61 million tons. Moreover, this output depends on the rainfall situation in the next 60 days. If Brazil's cotton production is 11 million bales and domestic consumption is 3 million bales, there are 8 million bales that can be exported, as well as the carry over of the previous year.

Last week, the Asian quotation basis of Brazilian cotton was greatly strengthened, the domestic spot price rose sharply, cotton farmers had no intention to sell cotton, and the real exchange rate against the US dollar also began to rise, leading to the strong US dollar quotation of Brazilian cotton.