Market Observation: Brazil'S Cotton Export Is Expected To Be Second Only To North America In The Future

The president of the Brazilian Cotton Producers Association (Abrapa) said that due to the high temperature and little rain in Mato Grosso, the soybean production potential declined, and farmers were evaluating the best management and profit alternatives for cotton.

Almost all cotton in Mato Grosso is sown after soybean harvest.

Alexandre Schenkel said that the recent rains have brought some relief to the soybean crop. Farmers planning to plant cotton in the second season after soybean harvest are still evaluating whether to advance cotton planting to December.

This operation will be at the cost of losing the soybean harvest, because cotton will be sown in the same area, but planting ahead of time to December can improve the cotton yield per unit area.

This strategy can also ensure that Brazil's largest cotton producing state receives more rainfall during the cotton growth cycle. The El Nino climate phenomenon has brought irregular rainfall to the north central part of the country, which also caused rainfall reduction in the first few months of this year.

Schenkel said at the annual dinner of the National Grain Exporters Association (Anec) on Thursday evening: "Some plots of soybeans have been replanted, but the focus of the market is on how far they can recover. Many regions are affected by high temperatures. Some plots need to be replanted. If soybeans cannot be planted, farmers have to make other decisions."

President Abrapa has previously said that there may be cotton that can be harvested in the first crop, but he still avoids talking about the yield because producers are still evaluating whether to continue to plant soybeans in some areas.

"We are more concerned about the cotton planted after soybean harvesting. We will evaluate the crops every week and every other day, monitor every farmland and pay attention to various influencing factors."

He said: "After this week's rainfall, soybean production is expected to rise. The rainfall is very timely. We are observing whether the soybean cycle will be extended, which may erode the cotton planting window."

However, he said that people agreed that soybean production would decline, because the yield per unit area would be "seriously" affected. "It is too early to talk about the yield reduction, but in fact, the soybean yield will be lost."

President Abrapa said that for the farmers who decided to plant cotton in the first crop, in addition to the loss of soybean yield, he must "invest more technology in management, because we must restore productivity".

"Planting in December will have a higher cotton yield. There is no need to harvest soybeans, but the cotton yield will be higher, which will be a decision that producers must make."

Mato Grosso produces about 2 million tons of cotton every year, accounting for 2/3 of Brazil's total output.

In 2023/24, Brazil will become the third largest cotton producer in the world. When the soybean harvest encounters problems, the increase of cotton production may consolidate Brazil's position in the global cotton market.

Miguel Faus, president of the National Cotton Exporters Association (Anea), said that the export sector was paying attention to the development of the situation. "As Brazil occupies a prominent position in the market, any change will have an impact on overseas."

He also said at the Anec dinner that even if there is a problem with the cotton harvest, the commitment of cotton producers will not be risky.

"50-60% of the newly planted cotton has been pre-sale, so there will be no problem with the contract, and we will closely follow up."

According to the US Department of Agriculture (USDA), Brazil is expected to become the 20th largest cotton exporter in the world in 2023/24, second only to North America.