Brazil hits record cotton production in 2022-23 as global supply rises

04 Jan '24

2 min read

Pic: Adobe Stock

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In 2022-23 season, Brazil's cotton production hit a record high, spurred by increased cultivation and a record productivity.
Despite a global rise in supply, sluggish demand led to lower prices and a surplus in Brazil, affecting exports.
The crop area grew by 4 per cent, with production reaching 3.173 million tons, marking the highest output ever recorded.

Brazil's cotton production reached a historic high in the 2022-23 season, driven by expanded cultivation and productivity. Despite a rise in global supply, sluggish demand, hampered by unfavourable economic conditions, led to bloated inventories and reduced cotton prices worldwide, according to a report from the Center for Advanced Studies on Applied Economics (CEPEA).

From January to May in Brazil, despite it being the offseason, prices significantly dropped, influenced by expectations of a good crop and weak demand. With the higher surplus, exports were expected to perform well in 2022-23. However, early 2023 saw a slow pace in anticipated trades, as prices were not deemed attractive by sellers.

Between May and June, monthly average prices were stable, but they hit the year's lowest level in July. In subsequent months, monthly averages fluctuated less, supported by exports that helped reduce the domestic surplus. Logistical issues and rising transportation costs were also noted in 2023, along with discrepancies in product quality, which limited trading, CEPEA said in its latest fortnightly report on the Brazilian cotton market.

In 2023, the CEPEA/ESALQ Index for cotton dropped by 24.4 per cent, closing at BRL 4.0230 per pound on December 26. Between December 29, 2022, and December 26, 2023, the export parity decreased by 19.4 per cent, influenced by an 11.5 per cent decrease in the Cotlook A Index and an 8.6 per cent devaluation of the dollar against the Real.

For the 2022-23 crop in Brazil, according to CONAB (Brazil's National Company for Food Supply), the area increased by 4 per cent compared to the previous season, totalling 1.664 million hectares. Productivity was estimated at 1,907 kilos per hectare, up 19.5 per cent from the season before and a record high. Production for 2022-23 was projected at 3.173 million metric tons, i.e., approximately 14.57 million running bales (standard US bale weight of 480 pounds), an increase of 24.2 per cent against the previous season and the highest in history.

According to the USDA, the global production for 2022-23 increased by 1.8 per cent compared to 2021-22, totalling 25.395 million tons, sustained by higher supply in China, India, and Brazil. The United States and Pakistan, however, registered significant decreases during the same period.

Fibre2Fashion News Desk (KD)

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