December 2, 2010

Cotton Acreage in Mato Grosso to Increase 27% in 2010/11

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

Farmers in Mato Grosso were allowed to start planting their 2010/11 cotton crop as of yesterday, December 1st. This marks the end of a 75 day period that started on September 16th during which live cotton plants were not permitted in the state. The purpose of the prohibition is to attempt to break the reproductive cycle of the boll weevil. Since Brazil does not have cold weather that could kill off the insect, the prohibition was put in place in an attempt to prevent one generation of the insect from carrying over to the next cotton crop. This program is very similar to what has been in effect for several years to prevent soybean rust spores from carrying over from one soybean crop to the next.

Farmers in Mato Grosso are anxious to plant their 2010/11 cotton crop to take advantage of record high prices. According to the Mato Grosso institute of Agricultural Economics (Imea), cotton acreage in Mato Grosso is expected to increase 27% year-on-year from 419,000 hectares planted in 2009/10 to an estimated 534,000 in 2010/11. The increase in cotton acreage is expected to come at the expense of soybean acreage in the state, but the soybean acreage in the state will still be approximately eleven times greater than the cotton acreage even with the increased cotton production. With the expansion of the cotton acreage, the state of Mato Grosso will produce approximately 50% of Brazil's cotton production this growing season.

Cotton farmers opted to grow more full season cotton instead of safrinha cotton because the delayed start of the rainy season delayed soybean planting which will not allow enough time plant a second crop of cotton. As a result, an estimated 150,000 hectares of intended soybean production has been switched to additional cotton acreage.

One of the principal cotton producing regions of Mato Grosso is the municipality of Alto Garcas located in southeastern Mato Grosso. The average cotton price in the municipality on November 1st was R$ 77.20 per 15 kilograms (US$ 1.35 a pound). Buy the end of November, the price had increased to R$ 87.10 per 15 kilograms (US$ 1.52 a pound. In November of 2009, cotton prices in the municipality were R$ 37.40 and R$ 39.60 respectively. With cotton prices being more than twice as high as last year, it's little wonder that cotton acreage has increased in Brazil.