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Cotton harvest progressing in Brazil, prices highest since 2012qrcode

Aug. 19, 2015

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Aug. 19, 2015
In their latest monthly report, Conab estimated that the 2014/15 Brazilian cotton crop would total 1.50 million tons or 13% less than the 2013/14 crop. The reduced production is the result of lower cotton acreage due low prices and excess supplies.

The center-west region of Brazil is the largest cotton producing region in Brazil and the acreage of both full-season and second crop cotton declined in 2014/15. The cotton acreage in Mato Grosso declined 12.5%, while it declined 17% in Mato Grosso do Sul and 37% in Goias.

Mato Grosso is the largest cotton producing state in Brazil and the full-season and second crop of cotton is approximately 60% and 50% harvested, respectively. The full-season cotton is plated in December and the second crop of cotton is planted in January and early February after the soybeans are harvested.

Cotton prices in Brazil have been increasing since February thanks largely to a weaker Brazilian currency and increased demand. As a result, the Mato Grosso Institute of Agricultural Economics (Imea) estimates that farmers in Mato Grosso had sold approximately 69% of their anticipated cotton production by the start of August.

For the 2015/16 growing season, farmers in Mato Grosso have already sold 29% of next year's crop with the majority being sold in exchange for inputs such as seed, chemicals, and fertilizers. Domestic cotton prices being offered in Mato Grosso are some of the highest since 2012 thanks in large part to the 25% devaluation in the Brazilian currency since the beginning of the year. Cotton prices have recently increased even further since the release of the U.S. August Crop Report last week.

Northeastern Brazil is the second largest producing region and the 2014/15 cotton production is expected to decline 8.8% due to an acreage reduction of 9.9%. The state of Bahia is the second largest producing state in Brazil and the cotton crop in the state is currently 31% harvested.

With the recent price increase for cotton, it is estimated that the cotton acreage in Mato Grosso will be unchanged in 2015/16. This is a change from a few months ago when it was expected that the cotton acreage would continue to decline in 2015/16.

In the state of Mato Grosso, most of the cotton is planted as a double crop after the soybeans are harvested. Corn is also planted as a second crop after soybeans, but the two crops are generally planted in different regions of the state, so there is not much competition between the two crops for acreage. In the state of Bahia, the majority of the cotton is planted as a full-season crop and the cotton does compete with soybeans and corn for acreage.


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