The trade dispute between China and the United States could end up favoring Brazilian cotton exports, according to the latest report released by Rabobank. According to the text, the robust production expected for this harvest will result in a large volume supply that should be directed to the foreign market.
“The estimate is that China will import 2.2 million tons of feather in the 2019/20 cycle (August/19 – July/20), a volume 25% greater than the previous period. Maintaining the import tax of 25% on US cotton imported by China should support export premiums in Brazil”, says Rabobank.
This is because the Brazilian cotton harvest is heading towards its final stretch before the intensification of the harvest in the main producing states, and the prospect of record production is strengthening in the field. “Although specific problems, such as rainfall above the historical standard in April and May, in addition to high cloud cover, have negatively impacted productivity in some regions. Rabobank estimates that Brazil will produce 2.6 million tons of cotton lint in the 2018/19 cycle”, he adds.
“The domestic market is undergoing a gradual recovery, reflected by the country’s slow economic growth. According to the USDA, Brazilian cotton consumption should reach 780 thousand tons in the 2018/19 harvest, 3% higher than in the last cycle, but still below the 915 thousand tons in the pre-crisis period of 2015”, he indicates.
However, the report indicates that, “due to the rains in April/May, in some regions, cotton farmers must choose to extend the crop cycle of earlier crops. The aim is to stimulate the formation of pointer apples, which can delay the start of the harvest and, consequently, the processing of cotton”.
Post: Marina Carvejani
Author: Leonardo Gottems
Source: agrolink
