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The Brazilian Association of Cotton Producers (Abrapa) signed this Tuesday a memorandum of understanding with the China Cotton Association (CCA) with the aim of promoting trade in cotton wool to the Asian country and strengthening Brazil's relationship with the largest global buyer of the commodity.
The president of Abrapa, Júlio Cézar Busato, told Reuters that the agreement will be of great help to the sector, as it will allow an increase in the exchange of information with China, the destination of around 35% of Brazilian cotton in the current season.
“They will be able to tell us what restrictions exist in the Chinese market, any problems that Brazilian cotton may have, so that they can be corrected... it is a way of better understanding demand”, he stated, who did not mention how much the agreement could increase Brazilian exports.
In addition, Abrapa intends to close agreements with other Chinese entities and other cotton-buying countries in Asia, added Busato.
Currently, Brazil is the second largest supplier of cotton to China, behind only the United States, and has managed to maintain the “market share” it gained during the trade war between Washington and Beijing.
Busato said that the Americans have been in the Chinese cotton market for a long time and already have agreements along the same lines as the one signed between Abrapa and CCA.
“That’s why (the USA) has reached where it has reached and we are also following the same path”, he stated, mentioning that the leadership in the supply of lint is largely due to the level of credibility that American cotton has in China. “We need to achieve this too,” he added.
According to Abrapa, CCA was created in 2003 and its members range from cotton producers to textile companies and research institutes.
“Expanding commercial relations is what (at the production end) will bring profitability to Brazilian farmers. This is what we need to guarantee so that we can increasingly increase the cotton area.”
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The National Association of Cotton Exporters (Anea) estimates that Brazil should end the 2020/21 harvest with sales of between 700,000 and 750,000 tons of lint to China. Until March, 651 thousand tons were shipped, a number that already exceeded the total sent to the country in the 2019/20 season, of 570 thousand.
ASIA
After recording the best first quarter in history this year, Anea projects shipments of 2.3 million tons of cotton for the 2020/21 harvest, an increase of 21%.
This is because Brazil has increased cotton sales not only to China, but also to several Asian countries, said the director of Anea, Miguel Faus.
“We have increased our presence and this relationship effort is made in all these countries, not just in China, so as not to have a concentration and be able to serve everyone”, stated the executive, regarding the existence of an alternative if the Chinese advance in business with the USA, to the detriment of the Brazilian product.
The president of Abrapa highlighted that the association signed a memorandum of understanding with India in January, through the Indian Textile Industry Confederation (Citi), “and we are negotiating others in other purchasing countries, such as Vietnam, Indonesia, South Korea, Pakistan and Bangladesh, as well as another entity in China.”
Safras & Mercado consultancy analyst Elcio Bento added that the scenario is promising for exports, as, in addition to the heated demand from Asia, Brazil has a favorable dollar, a smaller harvest in the United States and a large exportable surplus, given that consumption internal crash fell in the Covid-19 pandemic.
He calculates that Brazilian supply should reach 3.045 million tons in the 2020/21 commercial year (July 2020 to May 2021), compared to 2.53 million in the previous cycle. On the other hand, domestic consumption should fall from 680 thousand to 660 thousand tons – the lowest level in the historical series started in 2004/05.
“In the current season, 2.23 million tons were exported – the largest volume ever recorded in a commercial year – and an amount that exceeds… the same period last year at 21.4%.”
Source: Notícias Agrícolas
