Home / Knowledge / News / Textiles / Cotton acreage may fall 40% in Brazil – Plexus report

Cotton acreage may fall 40% in Brazil – Plexus report

07
Jul '12
Plexus Cotton Limited reported that the ongoing heat wave, which has gripped most of the United States since the middle of June, continued to be the main story this week. While the cotton market seems to be unfazed by this weather event, grain and soybean prices continued to explode towards their all-time highs.

The cotton market doesn’t seem to care much about grain and soybean prices at the moment and instead focuses on the bearish cotton story (huge ending stocks, defaults, economic woes).

Even though this huge price disparity that currently exists between cotton and soybeans/corn has no bearing on crops that are already in the ground, this will likely change once the time to make future planting decisions arrives.

At the current ratio between cotton and its competing crops we expect to see a significant drop in cotton acres!  Brazil will probably be the first major cotton producer that reacts to this enormous price difference and we would not be surprised to see cotton acreage drop by 30-40%. Others will follow next spring, including the US Delta and Southeast.

Even without major weather problems, this trend towards “food acres” will continue over the coming years, as it becomes increasingly difficult to meet the ever-rising demands of a growing global middle class. In such a scenario the last thing cotton can allow to happen is to make itself even more unattractive than it already is, otherwise we will all be wearing polyester some day.

Today the People’s Bank of China, the ECB and the Bank of England announced additional measures to shore up their sagging economies. China cut its one-year lending rate by 31 basis points and the deposit rate by 25 basis points, while the ECB dropped its benchmark interest rate by a quarter percent to 0.75 percent, the lowest level since the Euro was created in 1999. The Bank of England left its rate unchanged at 0.5 percent and instead opted to infuse another 50 billion British Pounds into the economy.

These moves come as no surprise, as cutting rates and printing money are unfortunately the only bullets left to combat deflationary forces. If left alone we would see a massive implosion of asset prices, but governments and central banks will do whatever it takes to prevent this from happening.

There is really no contest, because central banks have unlimited powers in regards to money printing and they will ultimately succeed in inflating assets back up. However, the heavy price to be paid for this unfettered money printing is the debasement of currencies and potentially the end of the current financial system.

July corn futures closed at 7.73 dollars/bushel, which is not far from the record 7.99 dollars/bushel set just over a year ago. Nearby corn futures have rallied by 2.22 dollar/bushel since making a low of 5.51 dollars/bushel on June 1.

What is unusual about the current heat wave is that it is occurring so early in the summer, therefore breaking all kinds of temperature records. Just last week alone there were over 2000 heat records matched or broken in the United States.


Must ReadView All

Foreign brands competing with local clothing companies in Vietnam

Apparel/Garments | On 17th May 2021

Foreign brands competing with local clothing companies in Vietnam

International brands are giving tough competition to the local...

Pic: Casimiro PT / Shutterstock.com

E-commerce | On 17th May 2021

London-based global fashion platform Lyst raises £60mn

Lyst, a London-based global fashion aggregator that operates an...

Pic: Shutterstock

Textiles | On 17th May 2021

Prime Content| China cotton index may remain stable in coming months: TexPro

The China cotton is expected to remain above 16,000 RMB per ton or...

Interviews View All

Textile Industry, Head honchos

Textile Industry
Head honchos

Blockchains will be in heavy use by early adopters by 2025

Textile Industry, Head honchos

Textile Industry
Head honchos

Marry craft and utility

Textile Industry, Head honchos

Textile Industry
Head honchos

The pandemic has reinstated need for organised retail spaces in Tier II...

Sanjay Jhunjhunwalla,

Sanjay Jhunjhunwalla

In the financial hub of eastern India, Kolkata, a humble production...

Benedetta Terraneo,

Benedetta Terraneo

Miko Srl, a subsidiary of US-based Sage Automotive Interiors and a member...

Vikram Juneja,

Vikram Juneja

Jaquard is a training institute providing a highly specialised training...

Jacques Prigneaux, EDANA

Jacques Prigneaux
EDANA

EDANA has been the leading global association and voice of the nonwovens...

Ian Russell, Pireta

Ian Russell
Pireta

UK-based Pireta has developed a unique free-form process to add durable,...

Suresh Patel, Non Woven Federation of India

Suresh Patel
Non Woven Federation of India

The Non Woven Federation of India (NWFI), representing the regional...

Anjali Bhaskar, Samatvam

Anjali Bhaskar
Samatvam

Samatvam, a womenswear brand that blends age-old craftsmanship with modern ...

Seema Agrawal, Artisan Saga

Seema Agrawal
Artisan Saga

Artisan Saga, founded by Kaushik Rajani and Seema Agrawal, is an online...

Abhishek Bajaj & Samiksha Bajaj, Samshek

Abhishek Bajaj & Samiksha Bajaj
Samshek

Samshek is a fashion forward tech brand which combines digital experience...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


editorial@fibre2fashion.com

Letter To Editor






(Max. 8000 char.)

Search Companies





SEARCH

Leave your Comments


May 2021

Subscribe today and get the latest update on Textiles, Fashion, Apparel and so on.


Advanced Search