Brazil News

Domestic prices, weekly news and special reports about the world's second largest exporter of Cotton

Executive Summary

  • Business is starting to pick up after the holiday periods, however, we are still feeling the demand a little weak and, on the other hand, the price ideas between buyers and sellers appear a little distant. We are seeing some spot business mainly for the domestic market and for the export market mainly for the crop 23/24. Due to the beginning of the crop and the higher cotton availability, the pace of trade is expected to increase.
  • 54% of 2022/23 crop has been planted. This is an 8.6% decrease compared to the same period last year. This is because of Mato Grosso being 47% behind last year’s planted figure of 90%. The pace of planting has been reduced due to the high volume of rainfall which has slowed down soybean harvesting.
  • According to latest Abrapa figures, 87% of 21/22 crop has been sold by farmers and 55% of 22/23 has been sold by farmers. Below is a graph showing top buyers of Brazilian cotton in tonnes. 
  • Conab projects an increase of 16.6% for the 2022/23 Brazilian production compared to 2021/22, reaching 2.973 million tons, which would be the second highest in history. 
  • For now, weather has been favouring both planting and the development of the crop. Cotton producers, remain concerned about cost of production. According to Imea, the first estimate of cost of production for 23/24 crop shows a decrease of 8.68% in effective operational cost (COE) compared with what was consolidated in the crop 22/23, and was estimated at R$ 16,849/ha. This decrease was influenced mainly by the fall of 28.11% in costs fertilizers costs.
  • Data from MDIC point out that Brazilian exports are not are having a good performance at the beginning of the year. In the 15 first working days of the year were exported 92.2 thousand tons, an average of 6.1 thousand tons per day compared to 9.5 thousand tons daily in January/2022, a fall of 35.3%.
  • Domestic consumption is estimated by Conab at 720 thousand tons in the 2022/23 season, 2.1% up compared to previous crop, returning to 2020/21 levels.

Cotton CEPEA/ ESALQ - 8 days credit

Price is based ex warehouse in São Paulo  

Source: CEPEA 

Brazilian Monthly Export Sales Report

Source: MDIC

NY CTH23 vs. CEPEA/ ESALQ - 8 days

Source: Barchart & Cepea 

Brazilian Basis

Basis Santos Port from Mato Grosso CTZ22

Source: IMEA

Weekly Crop Condition Update

Updated on: 16/01/2023

  • In Mato Grosso, the pace of safrinha planting was reduced due to the high volume of rainfall. The crops show good vegetative development.
  • In Bahia, ideal rainfall allowed the advance of planting and the crop presented good initial development.
  • In Mato Grosso do Sul, the crops show good initial development.
  • In Maranhão, the Gerais de Balsas region finished planting and the crops are in good conditions.
  • In Goiás, the municipality of Chapadão do Céu and the eastern region of the state finished planting and the crops are developing well.
  • In Piauí, planting is finished and the crops are developing under good conditions.

Source: Conab

Weather Condition for Main Producing Regions

Green: Favourable – Red: High restriction (lack of rain)

Source: Conab

U.S Dollar/ Brazilian Real

The Brazilian Real reacted surprisingly well against the Dollar following the presidential election in Brazil, awarding former President Lula to be the next nation’s leader. However, after testing the 200-day moving average on a daily chart, the Dollar gained strength and began the year at R$5,4797 after statements made by Lula which challenges the spending cap, bringing uncertainty to investors. For the first 3 weeks of the year, the Dollar has depreciated more than 4,000 points against the Real and has found support at the 5,0700 level. 

Cost of Production to Farmer

Methodology: The cost of production price varies according to the closing exchange rate of the previous day. Production and costs estimates are retrieved from Conab for Brazil, Mato Grosso and Bahia regions.

Conab Updates

Both weekly and monthly updates are retrieved by Conab. 

Updated on: 24/01/2023

Business is starting to pick up after the holiday periods, however, we are still feeling the demand a little weak and, on the other hand, the price ideas between buyers and sellers appear a little distant. We are seeing some spot business mainly for the domestic market and for the export market mainly for the crop 23/24. Due to the beginning of the crop and the higher cotton availability, the pace of trade is expected to increase.

According to Conab, prices increased in the state of Mato Grosso by 0.59%, being sold on average at R$ 170.17/@. In Bahia, the average value was R$ 168.00/@, up 0.90% in the week.

Planting has advanced well in most regions and has already reached 52.5% of the expected area. There has been a delay in Mato Grosso due to excessive rains. In Bahia, there are some regions with losses due to excess moisture.

Data from MDIC indicate that Brazilian exports are not having a good performance during the beginning of the year. In the first 15 working days of the year, Brazil exported 92.2 thousand tons of cotton, an average of 6.1 thousand tons per day compared to 9.5 thousand tons per day in January/2022, a fall of 35.3%. 

Updated on: 24/01/2023

Domestic market from mid-November until mid-December was weak. Buyers have acquired only what is necessary for their immediate coverage, meanwhile, sellers were not happy with prices offered by the market.

Domestic prices have fallen following the devaluation of crude oil and the drop in international quotations. The price of the dollar, however, has sustained further drop. Agents are attentive to developments in international cotton prices and global demand for lint.

The performance of Brazilian exports of cotton in the month December/2022 was the worst in the last 5 years. The total exports in 2022 were almost 100 thousand tons below the expected.

Inflation and economic recession have affected domestic consumption. Even so, consumption is expected to increase for the harvest 2022/2023 in relation to the previous one. In view of the production growth in the 2022/2023 harvest, ending stocks are expected to grow by 28,3%.

Imea Updates

Updated on: 05/12/2022

The fourth estimate of 22/23 Mato Grosso crop, which was published on 5th of December, maintained the projections of the last report.
Thus, the area for the future crop did not represent a change when compared to what was consolidated in the 2021/22 crop, being estimated at 1.18 million hectares. It should be noted that in Mato Grosso, one of the main factors that help in the decision of the producer regarding the area planted to a particular crop is the price.

Thus, together with the continued devaluation of the lint in recent months, may continue to discourage the final decision of the cotton producer regarding the total area that will be allocated to cotton in the 2022/23 season.In addition to price, the progress of planting is also an important factor in the decision of the producer as the planting area. And in that sense, according to IMEA estimates, about 98% of the areas may be planted within the window considered ideal for planting the crop, if weather conditions favour the period of soybean harvest in the state.

Regarding average productivity for Mato Grosso, the estimate is 12.27% higher when compared to what was consolidated in the 2021/22 harvest. However, the rhythm of planting, the percentage planted within the period considered ideal for the development of the crop, weather conditions and possible occurrences of pests and diseases, will be decisive for the final productivity of the cycle.

Finally, with the area and productivity estimated above, it is expected a production of 4.91 million tons of seed cotton, an increase of 12.19% compared to what was recorded in the crop 2021/22, based on the expectation of a better yield in the future season.

Updated on: 12/12/2022

The new estimate of supply and demand for cotton lint in Mato Grosso showed readjustments in projections for 2022/23 crops.

For the 2022/23 crop, cotton lint production is estimated at 2.05 million tons. Despite the drop compared to the last report due to the reduction in area, it still shows an increase of 12.87% compared to the 2021/22 crop, due to the expectation of better productivity in the season.

Given the estimate of higher production compared to the past harvest, an increase of 15.84% in exports for the 2022/23 harvest is expected compared to 2021/22, totaling a volume equivalent to 1.59 million tons. Regarding national consumption, this was estimated at 459.10 thousand tons, 93.87% coming from the interstate market and 6.13% from Mato Grosso. Thus, the expectation of recovery in the Brazilian economy contributed to the 3.54% increase in domestic consumption compared to the 2021/22 harvest.

Cepea Updates

Updated on: 16/01/2023

Cotton area may increase in the 2022/23 season, due to the good profitability over the last years. However, the possible downturn of the world economy, because of inflation and covid-19 cases in China, remains concerning agents.

Conab projects an increase of 16.6% for the 2022/23 Brazilian production compared to 2021/22, reaching 2.973 million tons, which would be the second highest in history. This is the result of productivity at 1,815 kilos per hectare (+13.9% in relation to 2021/22) and the area increase (+2.3%), at 1.638 million hectares.

For the time being, the weather has been favouring both planting and the development of the crop. Cotton producers, however, remain focused on higher production costs, especially of fertilisers. You can see how cotton cost of production compares to soybeans and corn at the bottom of this page, under Brazilian historical series. 

Due to the beginning of the crop and the higher cotton availability, the pace of trades is expected to increase. Some purchasers are already interested in guaranteeing the product of the next crop through contracts.

As for the domestic consumption, Conab estimated a total of 720 thousand tons in the 2022/23 season, 2.1% up compared to previous crop, returning to 2020/21 levels.

Ending stocks in Brazil, at 1.34 million tons in December/22, are the lowest since 2018/19 and may sustain prices until the beginning of the next season. In December/23, on the other hand, Conab forecasts ending stocks at 1.614 million tons (2022/23 crop), the highest since 2019/20.

BRAZILIAN EXPORTS – The USDA indicates that shipments from Brazil may total 1.807 million tons in the 2022/23 (from August/22 to July/23), moving up 7.4% compared to the season before and the third highest in history.

Brazil Historical

Domestic prices, weekly news and special reports about the world's second largest exporter of Cotton

Planted Area

In Kg/Ha.

Production

In Kg/Ha.

Productivity

In Kg/Ha.

Cost of Production vs. Soybeans & Corn

October 2022 estimates in R$/ha.

Main Importers of Brazilian Cotton

In tonnes.