April 2, 2012

Cotton Production Continues to Increase in Mato Grosso

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

If the state of Mato Grosso was a country, it would rank eight in the world in cotton production producing 3.6% of the world's cotton or 992,000 tons in 2011/12. Mato Grosso would be essentially tied with Australia in cotton production and ahead of Uzbekistan. Cotton has been produced in Mato Grosso for the last twenty years, but it only became a significant crop during the last fifteen years.

According the Mato Grosso Institute of Agricultural Economics (Imea), cotton acreage in the state increased significantly during the 2010/11 growing season (+70%) as a result of record cotton prices. Acreage held essentially unchanged in 2011/12, but improved growing conditions is expected to result in a crop that is 7% larger than in 2010/11 (992,000 tons in 2011/12 vs. 937,000 tons in 2010/11).

The Mato Grosso Association of Cotton Producers (Ampa) reports that even though the state produces half of Brazil's cotton crop, only 7% of the cotton produced in the state is used within the state to produce textiles and clothing. Sixty percent of Mato Grosso's cotton production is sold to domestic Brazilian manufactures and the remainder is exported. Mato Grosso accounts for approximately half of Brazil's cotton exports.

Imea reports that the current cotton crop in the state is generally rated as good to very good in condition and that the cotton harvest will begin late in May or early June and continue through July. Cotton is produced in the state as a full-season crop which is planted in December and harvested in June or it can be planted as a second crop (safrinha) after the soybeans are harvested. The safrinha cotton is generally planted in January and harvested in July.

If prices are favorable, cotton production in Mato Grosso is expected to continue increasing. The climate and soils of Mato Grosso is very favorable for cotton production and the two main areas of production are in southeastern and western parts of the state. The biggest drawback to cotton production is the high cost of transporting the cotton to end users in Brazil or to export facilities.

The second largest cotton producing state in Brazil is Bahia located in northeastern Brazil. In Bahia, cotton is produced by huge agri-businesses that moved into the state over the last decade to take advantage of cheap and abundant land. The climate in Bahia is not quite as good for cotton production as it is in Mato Grosso, so a significant portion of Bahia's cotton production is irrigated.