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Cotton consumption to remain strong in 2008/09
14 Jun '08
3 min read
Brazil's cotton production in 2008/09 is forecast at 6.4 million bales. This represents a 10.5 percent fall from the previous year when Brazil posted a record production of an estimated 7.15 million bales. The decline in production corresponds closely to a 10.1 percent reduction in cotton acreage, estimated at 980,000 hectares in 2008/09.
Cotton is expensive to cultivate. The rising cost of inputs such as fertilizer and energy is expected to dampen cotton plantings in 2008/09. A relatively lower cost of production and high market prices for other commodities create higher economic incentives, encouraging farmers to shift land away from cotton production.
According to Brazil's National Company of Food Supply (CONAB), the South and Southeastern regions of Brazil saw a 40 percent decline in acreage, leading to a 35 percent (136,000 bales) fall in output in 2007/08. The states of Mato Grosso and Bahia, Brazil's top-two cotton producers account for about 52 percent and 31 percent of annual production respectively. Given those shares, cotton production in Mato Grosso could fall by nearly 400,000 bales (10.5 percent) in 2008/09.
In Bahia, production could experience an estimated fall of more than 200,000 bales in 2008/09. Most of the decline in cotton production is attributed to shift in area from cotton to other commodities production in the 2008/09 crop year.
Beginning stocks, almost identical to the estimated production, are forecast at a record 6.35 million bales in 2008/09, up 11.8 percent from a year ago. This derives partly from the record production and a relatively stable consumption in 2007/08 resulting in large ending stocks that year.
Cotton is expensive to cultivate. The rising cost of inputs such as fertilizer and energy is expected to dampen cotton plantings in 2008/09. A relatively lower cost of production and high market prices for other commodities create higher economic incentives, encouraging farmers to shift land away from cotton production.
According to Brazil's National Company of Food Supply (CONAB), the South and Southeastern regions of Brazil saw a 40 percent decline in acreage, leading to a 35 percent (136,000 bales) fall in output in 2007/08. The states of Mato Grosso and Bahia, Brazil's top-two cotton producers account for about 52 percent and 31 percent of annual production respectively. Given those shares, cotton production in Mato Grosso could fall by nearly 400,000 bales (10.5 percent) in 2008/09.
In Bahia, production could experience an estimated fall of more than 200,000 bales in 2008/09. Most of the decline in cotton production is attributed to shift in area from cotton to other commodities production in the 2008/09 crop year.
Beginning stocks, almost identical to the estimated production, are forecast at a record 6.35 million bales in 2008/09, up 11.8 percent from a year ago. This derives partly from the record production and a relatively stable consumption in 2007/08 resulting in large ending stocks that year.
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