Last year was marked by a dash to plant cotton among well-capitalized farmers of Brazil's Cerrado region. This has had a knock-on effect on shipments and, as a result, the South American ag giant is expected to leapfrog Australia and Uzbekistan to become the world's No. 3 exporter this year. Shipments have slightly more than doubled in the 2011-12 season (Aug-Jul) so far to reach 791,130 metric tons and another 300,000 tons will likely leave ports by the end of July, according to the Brazilian Cotton exporters Association (ABRAPA).
Allied to a larger crop -- lint cotton output rose 65% to 1.96 million metric tons (mmt) in 2010-11 -- declining domestic demand also freed up more cotton for shipment. The local textile industry is struggling to compete with imports from China and its cotton consumption fell 10% last year.
With little prospect of a textile industry renaissance, Brazil will have to sell another 1 mmt of cotton abroad from the next crop, which will be harvested from May. However, slightly worryingly, forward sales remain weak. The Agriculture Ministry pegs the 2011-12 crop at 2.0 mmt, marginally higher than the year before. However, that level of output is not guaranteed with drought in Bahia and excessive rain in Mato Grosso concerning producers.
The profile of cotton producers has changed substantially over the past five years with the traditional farmers in Minas Gerais and Sao Paulo increasingly overshadowed by hi-tech operations in Mato Grosso and Bahia, who plant cotton after a summer soybean crop. With cotton now well established in the crop rotations of these regions, the tendency will be for the crop to expand in the next years, price permitting. However, Brazil is still a long way behind the U.S., which is seen exporting 2.4 mmt in 2011-12 and India, which is pegged to ship 1.7 mmt.