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Brazil’s cotton area may increase in the 2022-23 season

BTJ Desk Report
Brazil's cotton area may increase in the 2022-23 season

The cotton area in Brazil may increase in the 2022-23 season due to the good profitability over the last years, according to the media reports.

However, it may be affected by the possible downturn of the world economy because of global inflation and COVID-19 cases in China, media reported citing the Center for Advanced Studies on Applied Economics (CEPEA).

Brazil’s National Supply Company (CONAB) has projected cotton production in Brazil to reach 2.973 million tons for 2022-23, an increase of 16.6% compared to 2021-22, which would be the second highest in history.

This is the result of productivity at 1,815 kilos per hectare (+13.9% up from 2021-22) and an area increase of 2.3% to 1.638 million hectares.

For the time being, the weather has been favouring both the planting and the development of the crop.

Cotton producers, however, remain focused on higher production costs, especially of fertilizers, the CEPEA report stated.

Due to the beginning of the crop season and higher cotton availability, the pace of trade is expected to increase. Some purchasers are already interested in guaranteeing the production of the next crop through contracts.

CONAB estimated in its December 2022 report that the consumption can reach 720,000 tons in the 2022-23 season, 2.1% up from 705,000 tons in 2020-21.

Ending stocks in Brazil were 1.34 million tons in December 2022, the lowest since 2018-19, and may sustain prices until the beginning of the next season.

CONAB also forecasts that the ending stocks to be at 1.614 million tons (2022-23 crop) in December 2023, the highest since 2019-20.

The USDA estimates the world 2022-23 cotton crop at 25.197 million tons and global consumption to reduce by 4.9% to reach 24.32 million tons, the lowest since 2019-20 (22.658 million).

World imports, in turn, are expected to amount to 9.204 million tons, down 1.4% from 2021-22.

Moreover, the USDA projects the global stocks at 19.5 million tons in 2022-23, 4.8% up compared to the previous season.

The USDA indicates that shipments from Brazil may total 1.807 million tons in 2022-23 (from August 2022 to July 2023), up 7.4% compared to the season before and the third highest in history.


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