Economic Observation: Brazil Is Expected To Replace The United States As The World'S Largest Cotton Exporter

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Affected by extreme weather, the output and quality of American cotton are expected to decline this year. Brazil may surpass the United States as the largest cotton exporter.

CNBC Jiang Yu: This year, Texas and Georgia, two major cotton growing states in the United States, both experienced extreme weather.

This year, Texas, which accounts for 40% of the cotton production in the United States, experienced the second hottest summer on record, with an average temperature of more than 85 degrees Fahrenheit (about 29 degrees Celsius). During this period, heat waves occasionally occurred. According to the data of the United States Department of Agriculture, since the beginning of July, the cotton crops rated as good to excellent in the state have declined by 23 percentage points. Now only 11% of cotton is rated as good to excellent, which is the lowest level since records.

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In Georgia, the second largest cotton growing state in the United States, whose output accounts for 15% of the total, the rainfall in August was 55% higher than the average level in the past 10 years due to the impact of Hurricane "Idalia". A large amount of rainfall hitting the open cotton bolls will damage the plant fiber and cause the loss of cotton batting. At present, only 58% of cotton in the state is rated as good to excellent, which is the second lowest level in the same period of the past five years.

The analysis pointed out that, affected by extreme weather, the output and quality of American cotton are expected to decline this year. At the same time, British trader Plexus Cotton pointed out that the quality of cotton in Brazil is very good this year.

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The United States is the world's third largest producer and largest exporter of cotton. The United States and Brazil together account for more than half of global cotton exports. According to the data of the United States Department of Agriculture, Brazil's cotton production and export volume are catching up in recent years.

In terms of output, from 2023 to 2024, the United States is expected to produce 14 million bales of cotton, while Brazil is expected to produce 13.3 million bales of cotton, with a yield gap of less than 1 million bales. In terms of exports, the United States is expected to export 12.5 million bales of cotton from 2023 to 2024, while Brazil is expected to export 11.25 million bales. Bloomberg reported that Brazil is expected to continue to increase cotton production and exports in the next few years.

The analysis also pointed out that due to poor crop quality, the USDA may reduce the current export forecast. Plexus Cotton said that if the situation of cotton crops in the United States worsens further, Brazil may easily surpass the United States. They also predicted that Brazil may become the largest cotton exporter in the current sales season.