RIO DE JANEIRO, BRAZIL – Brazilian cotton exports rose 42 percent in a record season driven by China, which decided on Brazil’s products before the trade war with the United States. In addition to the trade dispute, the exchange rate was also a significant factor. The Brazilian Real lost close to nine percent against the dollar since mid-July, removing the competitiveness of US products.
Cotton joins soybeans and corn among the Brazilian agricultural exports that are growing faster for China and winning the US market, its main rival.
Earlier this month, President Donald Trump must have left authorities in Argentina and Brazil perplexed when he announced on Twitter plans to impose new tariffs on steel, alleging that these countries were artificially devaluing their currencies.
The tweet underscored how much the strong dollar has affected American farmers.
“Brazil had giant harvests, and these larger exports were required,” said Elcio Bento, an analyst with the consulting firm Safras & Mercado, in an e-mail. “In 2020, the forecast is for another large harvest”.
Since the season began in July, Brazil has exported 1.06 million tons of cotton, up from the previous record of 748,000 tons in 2018, according to government data compiled by Safras.
The US Department of Agriculture said in a report this month that China began buying products from Brazil to replenish state reserves, leaving aside traditional exporters.
Traders in China’s private sector also “chose to source from Brazil due to high retaliatory tariffs on US cotton,” the USDA said. Brazil benefited from the “growing acceptance” of the quality of its cotton, the agency said.
In October, Brazilian exports to China, Vietnam, Bangladesh, Indonesia and Turkey exceeded those of the US, the world’s largest exporter, according to the USDA.
Brazil plans to gain additional markets to offset the relief of trade tensions between the US and China, said in a text message Marco Antonio Aluisio, vice president of the National Association of Cotton Exporters (ANEA).
“The US is the preferred source due to its variety of available qualities, reliability and on-time delivery and USDA verifiable classification information for each shipment purchased,” said Louis Rose, research and analysis director at Rose Commodity Group in Memphis, Tennessee, in an email.
Nevertheless, “Brazilian sales to China may remain strong” as the Asian country is increasing its reserves, Rose said.
Source: Infomoney