Brazil is catching up to the U.S. in cotton exports. Poor weather in Texas hurts U.S. production. Brazil has had a strong cotton season.
The U.S. market share is shrinking. This follows Brazil’s rise in corn exports this year and long-time leadership in soybean sales.
The U.S. also trails Russia and the European Union in wheat exports.
“Brazil could easily pass the U.S. this season if U.S. struggles continue,” said Peter Egli of Plexus Cotton to Bloomberg Linea.
Both countries account for over half of worldwide cotton sales.
The U.S. projects to export 12.5 million bales this season. This number may go down when the U.S. Department of Agriculture (USDA) updates its figures.
Brazil expects to ship 11.25 million bales. Analysts predict lower U.S. figures due to drought and declining fiber quality.
Jack Scoville of Price Futures Group notes that U.S. cotton quality has dropped due to drought.
Brazil’s cotton boasts high quality thanks to good rains. Almost 40% of U.S. cotton crops are in drought-affected regions, especially Texas.
Only 11% of Texas’s crop rates as good or excellent.
The U.S. production will likely be under 14 million bales, says the USDA.
“Our infrastructure can’t handle such low production,” commented Buddy Allen, leader of the American Cotton Shippers Association.
Background
Brazil is less than a million bales behind U.S. output. “Brazil is our most formidable competitor,” added Allen.
As corn prices drop, Brazilian farmers may switch to cotton farming, where the profits are better.
“Farmers plan to increase cotton farms next year,” said Cleiton Gauer of IMEA.
“We will likely export even more since local demand can’t absorb all the supply.”
Brazil’s growth in the cotton sector isn’t new. It’s part of a long-term strategy to diversify exports.
The U.S. has traditionally been a leader in cotton, but recent challenges give Brazil an opening.
Investment in modern farming techniques also gives Brazil an edge.
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