May 16, 2011

Lack of Infrastructure Could Hinder Brazilian Cotton Exports

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

Brazilian cotton farmers are getting ready to start harvesting a record cotton crop in June/July. Total cotton production in Brazil for the 2010/11 growing season is expected to reach 2 million tons or an increase of 70% compared to 2009/10. Cotton acreage in Brazil increased 65% and the weather has been favorable for the development of the crop. Domestic cotton consumption in Brazil is approximately 1 million tons and Brazilian exports are expected to hit 800 or 900,000 tons, which would be double last year's exports. If achieved, this level of exports would put Brazil among one of the top cotton exporters in the world.

Mato Grosso is the largest cotton producing state in Brazil and most of the full season crop in the state is rated in good condition. Officials from Anea (Brazilian Cotton Exporters Association) feel that 80% of the full season crop in Mato Grosso is assured and that one more good rain during the month of May will be needed to obtain top yields. The safrinha cotton crop in Mato Grosso, which was planted during the month of January, still needs additional moisture to insure average yields. The condition of the crop in other major producing states such as Bahia is also rated in good condition.

According the Brazilian Association of Cotton Producers (Abrapa), 1.3 million tons of the 2010/11 production has already been sold including 750,000 tons of cotton already sold to exporters. With cotton exports expected to double in 2010/11, a lack of logistics at the Brazilian ports could result in extensive backups at the ports. The previous record export pace from Brazil was 100,000 tons per month and to achieve the 800 or 900,000 tons of expected cotton exports, it would take record exports for eight or nine consecutive months. Additionally, Brazilian ports are already congested with record soybean and sugar exports.

If cotton prices remain strong, cotton farmers in Brazil are expected to increase their 2011/12 cotton acreage by 15% or more. Cotton acreage could increase even more were it not for limited infrastructure and equipment.