January 2, 2018

Cotton Acreage in Mato Grosso expected to increase 15.8%

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

Cotton prices have bucked the trend recently in the commodity world. While the prices of most agricultural commodities continue to be lackluster, cotton prices are general quite good. As a result, farmers in Mato Grosso are expected to increase their cotton acreage in 2018/19. The Mato Grosso Institute of Agricultural Economics (Imea) is estimating that farmers in the state will increase their 2017/18 cotton acreage by 15.8% to a record high acreage of 725,600 hectares. The cotton production in the state is also expected to set a new record at 2.85 million tons.

The final production of course will depend on the future weather during the growing season. Most of the cotton in the state is planted as a safrinha crop after the first crop of soybeans are harvested. Safrinha cotton planting generally occurs in January and early February with harvest in July and August.

Cotton competes with corn for safrinha acreage in Mato Grosso. Therefore, an increase in cotton acreage probably would come at the expense of corn acreage. But, the safrinha corn acreage in the state (4.6 million hectares in 2017/18) is approximately 6 times larger than the safrinha cotton, so a big increase in cotton acreage would probably only mean a small decrease in corn acreage. It is possible that 100,000-125,000 hectares of safrinha corn could be switched to safrinha cotton production instead in 2017/18.

This is just another reason, along with low corn prices and delayed soybean planting, why the safrinha corn acreage in Mato Grosso may end up being lower than last year.

Farmers in the state have already forward contracted 61.5% of their anticipated 2017/18 cotton production according to Imea. Current prices in Brazil are already high enough to guarantee that farmers will make a profit on their cotton if the weather cooperates. Farmers generally don't like to forward contract more than 60-65% of their anticipated production until later in the growing season when they are more confident about their total production.

With improved prospects for the Brazilian economy in 2018, the domestic demand for cotton is expected to increase in 2018 with the recuperation of the textile industry.