May 14, 2019

Brazil's Cotton Acreage up 23% in 2018/19, more Increases Expected

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

Brazilian cotton farmers have been increasing their cotton acreage for the last 10 years and they are expected to continue the trend going forward according to the president of the Brazilian Association of Cotton Producers (Abrapa). In response to strong cotton prices, farmers in Brazil increased their 2018/19 cotton acreage 23% compared to last year and more increases are expected in future years.

Mato Grosso is Brazil's number one cotton producing state and the cotton in the state was planted earlier than normal due to the early harvest of the first crop of soybeans. The weather has been good thus far, and farmers are expecting very good yields. The president of Abrapa is expecting cotton yields to be even better than last year's good yields.

Brazilian farmers have forward contracted approximately 70% of their anticipated cotton production and they will sell the remainder of their crop after harvest. Cotton prices were higher when they were forward contracting their crop, so they have already locked in a profit on their 2018/19 production.

With a much bigger anticipated cotton crop and stagnated domestic consumption, Brazil is looking for more export markets. From January through April, cotton exports from Mato Grosso were up 36% compared to last year due to strong demand from China and Indonesia, which are the two principal importers of Mato Grosso cotton according to the Mato Grosso Institute of Agricultural Economics (Imea).

With the ongoing trade dispute between the U.S. and China, Brazilian cotton farmers feel they now have a window to increase their market share of China's cotton imports. Brazil is currently the second leading cotton exporter in the world trailing only the United States.