Sao Paulo-based CEPEA said increased consumption, lower production and falling ending stocks in Brazil and globally could support Brazilian cotton prices in early 2022. During the off-season, cotton prices in the local Brazilian market are likely to continue to firm or rise as most of the 2020/21 cotton has already been traded.
Brazilian national supply company CONAB estimates that cotton stocks in 2020/21 (December 2021) are 1.37 million tons, and cotton stocks in 2021/22 (December 2022) are 1.26 million tons, which is 1.26 million tons in 2017/18 (102 million tons), the lowest level since. However, due to the uncertainty of people’s purchasing power and the transmission of price increases in the textile industry chain, companies are very cautious in purchasing large quantities of cotton. Industry participants are also paying attention to the epidemic and the fluctuation of the U.S. dollar-real exchange rate.
CEPEA surveys show that Brazilian cotton production is expected to increase in 2021/22. With more rainfall this season, cotton planting could take place at an ideal time, especially in the soybean areas of Mato Grosso, Brazil’s largest cotton-producing state. However, the market is also worried that rising fertilizer prices will lead to a significant increase in production costs.
CONAB predicts that Brazil’s cotton output will reach 2.7 million tons in 2021/22, a year-on-year increase of 11%, the third highest in history. The planting area may increase by 12% to 1.542 million hectares, and the yield may reach 1,756 kg per hectare (+1.5%) .
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