According to customs statistics, my country’s cotton imports in November and December 2021 were 100,000 tons and 140,000 tons respectively, a year-on-year decrease of more than 50% and 60% respectively. However, it is worth noting that although the total import volume fell sharply, However, in November and December, the proportion of Brazilian cotton imports in total imports in that month bucked the trend and rose. In November, the proportion of Brazilian cotton increased significantly by 28 percentage points from the previous month, accounting for 53%, and US cotton accounted for 30%, followed by Burkina Faso and Australia; in December, Brazilian cotton accounted for 30% of the import volume that month. The proportion of cotton is more than 60%, leaving the US cotton, Indian cotton, Australian cotton, etc., which are also competitors, far behind.
Judging from traders’ quotations, the current basis difference of Brazilian cotton M 1-1/8 28GPT in January/February/March shipping period is concentrated at 16-18 cents/pound; while in the same shipping period, US cotton 31-3/31-4 36 /37 28GPT basis difference is 15-18 cents/pound (including 2020/21 and 2021/22, the specific indicators are different and the price difference is larger depending on the origin). Compared with American cotton, Brazilian cotton has neither price advantage nor quality. Advantage.
Why did Brazilian cotton imports continue to occupy the first place in the total import volume in November and December? The author summarizes the following points:
First, Brazilian cotton has been put into storage and port inventories have rebounded. Compared with the backlog of U.S. cotton due to port cargo and sluggish shipments since 2021/22, the shipment of agricultural products (including cotton) from Brazil’s Santos Port and El Salvador Port recovered rapidly in September/October. Therefore, in November and December, my country’s main ports will be warehoused , the quantity of bonded Brazilian cotton has gradually stopped falling and stabilized, slowly rebounding; while the scarcity of bonded US cotton, West African cotton, Australian cotton and other stocks from October to December gave Brazilian cotton the opportunity to seize customers and seize market share.
Second, the 2020/21 Brazilian cotton processed and shipped in the mid-term has advantages in quality, spinnability, and consistency compared to Meichen cotton. Judging from the survey, the shipment period of US cotton in 2021/22 is concentrated in December/January/March. The US cotton that is bonded and arrives in Hong Kong before the end of December is mainly 2020/21 mid- to late-season flowers, with various origins, many batches, The quality difference is large and the consistency is poor, so it is not favored by cotton textile enterprises, and Brazilian cotton mostly has medium-term flowers.
The third is to seize the Indian cotton market share. Due to the sharp rise in cotton prices in India from October to December, coupled with the continued rise in sea freight and tight shipping space, Indian processing companies and exporters have significantly reduced their willingness to fulfill contracts. Delayed shipments, price hikes and even breach of contract are not uncommon. Therefore, some orders, Textile companies that are rushing orders and have low raw material inventories quickly turn to purchasing bonded and immediate Brazilian cotton to meet production and billing needs.
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