Production should be lower, but sector begins 2021 optimistic

Cepea, January 15, 2021 – The decrease in cotton consumption in the first semester of 2020 helped to increase both domestic and international surpluses. However, the fast consuming pace in the second half of the year resulted in optimism in the agriculture and industrial sectors. International cotton prices are considered attractive, and the high number of deals already closed indicate that Brazilian cotton exports may continue at the same record pace from late 2020. The major issue is the export parity, strongly influenced by the dollar.


In general, agents should continue to watch carefully for the covid-19 pandemic, the advance of vaccines around the world and the Brazilian and global economies. As regards processors, concerns are linked to uncertainties about demand because of the high unemployment rate, new social distancing measures to fight covid-19 in Brazil and the end of the emergency aid.


Thus, a decrease in the income of the population in Brazil may lead consumers to opt for essential utilities, limiting the national demand for textile products. Agents should also keep an eye on oil prices and the competitiveness of polyester against the natural fiber.


2020/21 SEASON – After increasing for four consecutive crops, the Brazilian cotton output should total 2.67 million tons in the 2020/21 season, according to Conab (Brazil’s National Company for Food Supply), 11% down from the previous, but, still, the third highest in all times. The area to be sown with cotton is expected to shrink by 8.1%, to 1.53 million hectares, and productivity is forecast to decrease by 3.2%, to 1,745 kilos per hectare. After the 17% decrease in the domestic cotton consumption in the 2019/20 season, influenced by the covid-19 pandemic, Conab estimates an increase of 19%in the 2020/21 season, to 690 thousand tons.


EXPORTS – Brazilian institutions and associations are trying to promote the Brazilian cotton abroad, aiming to diverse importers and increase market share, strengthening relationship with Asian countries. Brazil has proved well able of exporting high volumes along the year, supplying high quality cotton with traceability, sustainability and competitive prices.


Estimates from the USDA indicate that Brazil may continue as the number two cotton-exporting country in the world, with 2.18 million tons in the 2020/21 season, only after the United States, which should export 3.27 million tons of the product.




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