Reaching the middle of the 2019/2020 harvest year, the expectation of cotton producers, exporters and market specialists is for a good cycle for the fiber in terms of production and productivity, repeating the sector's performance in 2018/2019. Brazil should harvest 2.8 million tons and has the challenge of exporting 1.95 million tons. These topics and the uncertainties about the possible impacts of the coronavirus and the trade agreement between the United States and China were discussed this Thursday (13/01), in Brasília, at the 14th Harvest Forecast Meeting, promoted by the National Association of Exporters of Cereals (Anec) and the National Association of Cotton Exporters (Anea).
The president of the Brazilian Association of Cotton Producers (Abrapa), Milton Garbugio, and representatives from the various cotton growing states in Brazil were present at the event, which also evaluated the performance of soybeans and corn in the country. The opening of the event featured speeches from the Minister of Agriculture, Livestock and Supply, Tereza Cristina and the director of the Agribusiness Promotion department of the Ministry of Foreign Affairs, Alexandre Peña Ghisleni.
“This meeting is very important, as it provides an X-ray of the harvest and the market situation, which can guide many of our decisions, not only for the current cycle, but also for the next one”, considers Garbugio. According to the president of Abrapa, after planting within a favorable climate window, crops are developing as expected. He highlights the historic numbers achieved in exports, with emphasis on the month of January, in which the country shipped 309 thousand tons of feather. “Far beyond what we expected”, he celebrates.
Records
For the president of Anea, Henrique Snitcovski, three important milestones for the cotton sector have already been achieved this harvest. “In the second half of 2019 alone, Brazil broke a record, exporting more than one million tons in six months. During the second half of last year, in a single month, it also registered a record of 288 thousand tons. If we add the volume that was shipped in January, everything that Brazil has already exported from July to January is more than it did in other harvests, in the period of the complete cycle, which runs from July to June of every year”, reveals.
The coronavirus is currently a major discussion in the sector, as Asia represents more than 85% of Brazilian cotton exports. According to Snitcovski, Brazilian shipments of the feather have not been impacted so far.
Global demand
For the guest speaker, Marcos Rubin, the need to reverse the downward trend in global cotton consumption, currently around 26 million tons, will be essential to mitigate possible effects of the virus on the market and also the agreement between the United States and China. Currently, demand and production of feather are very similar, after six years of slightly higher consumption. “It would be essential to have strong demand to deal with a trade war, but the scenario now is one of uncertainty, mainly in relation to the coronavirus. Exporting 1.9 million tons in 2020 would crown a successful year for the sector”, he says.
“We have constant negative revisions in consumption expectations, most likely, derived from the trade war, and the agreement of this dispute between the United States and China, which poses a certain risk to Brazil's export volumes. China was a great partner in 2019 and needs to be also in 2020. But for exports to be successful, there is the issue of the coronavirus, for which we have no answers as to how this could unfold from now on”, he ponders.
Exchange
According to Rubin, the appreciated exchange rate is paying off even when commodity prices are around 75 cents per pound. “There is still incentive to expand the area. A good part of the cotton sector is absorbing the investments that were made in the last three years. As these investments are amortized, the exchange rate becomes a stimulant”, he says.
Source: Notícias Agrícolas
