The 2019/2020 harvest should be marked by higher costs for cotton producers, according to information contained in the outlook report for Brazilian agribusiness, prepared and released by Rabobank. This happens mainly due to inputs valued by the rise in the exchange rate.
“On the other hand, lint sales prices tend to be lower than those seen in the previous cycle, pressured by the levels of quotations on the international market (closer to USD 0.65/pound) – even though the real is devalued against the dollar mitigate the drop in feather prices, when analyzing prices in local currency (R$)”, says the text.
According to the Mato-Grossense Institute of Agricultural Economics (IMEA), around 63% of the expected production of the 2019/20 cotton harvest in Mato Grosso, the main lint producing state in Brazil, was negotiated until November/19. “With a significant part of these deals closed with future exchange rate levels, for December/20, above R$ 4.00, Rabobank estimates that average sales prices tend to be around R$ 85/@ of feather. In this scenario, the estimate is for operating margins between 25% and 30% in the 2019/20 cycle for cotton farmers”, he adds.
“Despite this prospect of tighter margins in the 2019/20 harvest, compared to previous harvests, the estimate is that there will be no significantly negative impacts on the area. Rabobank expects the area allocated to cotton in this cycle to be close to 1.55 million hectares compared to 1.6 million hectares in the previous season. Following the productivity trend line, production is estimated at 2.6 million tons of feather in the 2019/20 harvest”, he concludes.
Source: agrolink
