South America Calling
Alastair Stewart South America Correspondent

Thursday 08/21/14

Brazilian Cotton Area to Slide on Prices

The recent slide in prices will cause Brazil to plant much less cotton in the upcoming 2014-15 season, according to the Abrapa, the cotton planters' association.

Brazilian cotton planted area will fall around 12% to 2.4 million acres in the 2014-15 season, which starts in November, after local prices slid below the minimum levels stipulated by the federal government in the last weeks.

According to Gilson Pinesso, the Abrapa president, the outlook is 'depressing.'

The association has already asked the federal government to intervene to guarantee prices for the 2013-14 crop, which is currently being harvested.

Abrapa is requesting revenues of R$450 million ($200 million) to support prices for 1 million metric tons (mmt) of cotton, or about 57% of the projected harvest.

Farmers in Mato Grosso and Bahia, the two main producing states, have harvested a little over 60% of their cotton area.

Brazil is the world's No. 5 cotton producer, substantially increasing output substantially over the past five years following heavy investment by large Cerrado farm operations. Cotton has been lucratively double cropped with soybeans in a number of the past years.

This year promises to be a much tougher year, but exports will still grow by as much as 25%.

According to the Brazilian Cotton Exporters Association (ANEA), Brazil will export approximately 1 mmt of cotton in the 2014-15 commercial year.

And forward sales figures indicate the commercial outlook for the 2013-14 crop is perhaps not as dire as Abrapa would paint. Around three-quarters was sold before the harvest began in May when prices were substantially higher, according to Marco Antonio Aluisio, Anea president.

Exports will rise in 2014-15 amid a decline in domestic demand linked to increased textile imports and a sluggish economy.


Posted at 12:43PM CDT 08/21/14 by Alastair Stewart
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