Brazil has the chance to seek at least one cup in 2023, that of world champion in cotton exports, as it foresees an increase in the planted area, while the cotton lint in the United States must deal with local competition for area with other crops. more profitable, according to assessments by Brazilian producers.
According to them, the scenario of Brazilian leadership in the global market could be confirmed if the US reduces something like 30% of planting, to make way for competing crops such as corn, soy and wheat. It’s a drastic cut, but not entirely ruled out.
The goal of leadership that one day cotton farmers in Brazil believe they will achieve can thus be anticipated. Since the Brazilian sector says it is prepared to move forward with production next year despite higher costs, in order not to lose markets in Asia, especially China, recently conquered.
While Brazilians are starting planting for the 2022/23 season (to be harvested next year), Americans are finishing harvesting the product from the same cycle and preparing for 2023/24, with a harvest in the calendar year of 2023, which should be the field in which the dispute will be waged between Brazil and the USA.
“In a short period of time, we will be the biggest exporters. And in a slightly longer space of time, we will also be the biggest producers. Perhaps we will be the biggest exporters next year”, said producer Júlio Cézar Busato to Reuters, before handing over the presidency of the Brazilian Association of Cotton Producers (Abrapa) to Alexandre Pedro Schenkel, who will head the entity in the 2023-24 period. .
China and India compete head to head for the position of the largest global cotton producer, according to estimates by the US Department of Agriculture (USDA), while Brazil comes in fourth, with about half the volume produced by the leaders, but today slightly behind the Americans , who had weather problems with the crop this year.
In terms of exports, Brazil is second behind the USA and expects to increase shipments by more than 22%, Abrapa said this week, confident in a production close to a record — most of the Brazilian plume is from the second harvest, planted after soybean harvest in early 2023, with Mato Grosso and Bahia leading the area.
“I am sure that next year we will have opportunities. While the others will back down, we will not back down,” said Busato.
Plume production should grow 18% in 2022/23, to almost 3 million tons, according to the association, with a recovery in productivity after some weather problems in the previous cycle, given that the planted area should increase by just over 1%.
“Mathematically, we should shrink the cotton acreage,” he said, citing 27% higher production costs after a spike in input values in 2022. completed.
The path for cotton would be similar to that for soybeans, a market in which Brazil has already surpassed the US as the largest producer and exporter for some time, while in corn some believe that Brazilian exports may also gain leadership soon, a condition that gives more weight to the nation in price formation in the world.
According to an analysis by the consulting and risk management company hEDGEpoint Global Markets, the expectation is for an increase in the cotton area in Brazil compared to 2021/22 and “planting within the ideal window”, considering the current climate conditions.
In the analysis, specialist David Silbiger did not dwell on what this could represent for the global market. But he said the current price leaves the US sector “near or even below cost of production, “while competing crops present better margin possibilities”.
“Thus, although it is too early to quantify how much area cotton will actually lose (in the US), it is clear that this crop is already starting at a disadvantage”, he declared, citing that the fiber suffers competition from corn, soybeans, peanuts, rice and wheat.
China is “open avenue”
The cotton crop is one of the most demanding in investments, with a harvester costing around 7 million reais, and such equipment has to pay for itself, which also explains the fact that many Brazilian producers remain faithful to the lint to honor financial commitments.
For tough times, Busato cites the competitiveness of cotton from Brazil, which would, according to him, double the productivity of the USA, in addition to having quality and traceability certifications, a differential that the competitor from the north does not have in the scale of the Brazilian product .
In the external field, Brazil has already exported more than 700 thousand tons to China (in 2020/21), as much as it consumes internally, but it also ships large volumes, especially to Asian countries, such as Vietnam, Bangladesh, Pakistan, Indonesia and Malaysia, in addition to from Turkey.
Busato recalled that in the trade war between the US and China, which reached its peak about three years ago, the Chinese, taxed by the US, “opened an avenue (market to Brazilians)”, and we entered with a 500-horsepower tractor. ”. And now this market needs to be maintained.
According to Schenkel, the new president of Abrapa, the country is the only one capable of meeting the additional demand for cotton in the coming years, as other competitors would have land limits to advance. Furthermore, he said, Brazil “has the advantage of not being anyone’s enemy.”
“The receptivity we have had on trips to Asia is always very positive.”
Source: CNN Brasil
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