Brazil Growers Rush to Plant Cotton Amid Buoyant Prices

Buoyant world cotton prices are prompting Brazilian growers to increase acreage devoted to the crop. Planted area for cotton is expected to jump 19 percent to 1.4 million hectares in Brazil’s 2018/19 marketing year and total production is expected to rise by 19 percent to 11 million bales, equal to 2.4 million tonnes. Exports, lent support by the continuing US-China trade dispute, are forecast to reach 6 million bales, a jump of 44 percent from the also strong 2017/18 season. Brazil is the fifth-largest cotton producer globally.

Meanwhile, cotton production in China, the world’s second-largest producer, is expected to remain mostly unchanged at 27.56 million bales, equal to 6 million tonnes, in 2018/19. And Pakistan, No. 4 in world cotton production, is estimated to produce 7.8 million bales, down 5 percent from last year, mainly due to area reductions.

Farmers in Matto Grosso, Brazil’s largest cotton producing state, plan to double the area planted on cotton, while others are planning to substitute area traditionally devoted for summer soybeans with cotton. The Brazilian Cotton Producers Association (ABRAPA) says an enhancement of Brazilian cotton grade and quality also is boosting export demand.

A 25 percent tariff imposed by China on US imports in July is estimated to add $600/ton for Chinese cotton importers, forcing China to seek cotton imports from Brazil and Australia. US cotton exports to China were down 50 percent from the same period in 2017/18. The US aside, China’s cotton imports got a boost from the Chinese government’s increase of 800,000 tonnes of cotton import quotas, pushing up imports to 1.5 million tonnes in 2018/19 up from 1.25 million tonnes in 2017/18.

The world’s top five cotton producers (chart on left). Cotton area planted in Brazil has been rising along with cotton prices (chart on right).