China’s Big Appetite Makes Cotton Market Look Good for Brazil

Next year should be good for the cotton sector, with greater demand and, consequently, higher prices of the commodity. This is one of the conclusions of Brazilian specialists, government representatives and representatives of the private sector.

All of them are participating in the 65ª Plenary Meeting of the International Cotton Advisory Council (Icac), which lasted the whole, in the city of Goiânia, capital of the midwestern Brazilian state of Goiás.

"In the talks it was clear that foreign demand is rising, and that it is going to remain above production next year," said the president of the committee organizing the conference, Paulo César Cunha. According to him, the forecast is for global production to reach 25 million tons of cotton lint, and for the demand to be 26 million tons.

Higher prices, in his evaluation, will benefit the producer countries, like Brazil and Egypt. "Today the price is close to a historic average considered low, 55 dollar cents per pound (lb). The tendency is for prices to rise," he said.

The main reason for the expansion of consumption, as is the case with various other sectors, is China. According to Cunha, the Asian giant is, simultaneously, the main producer, consumer and importer of cotton. The country, according to him, has an annual production of 6.5 million tons, but consumes 8.5 million.

Brazil, with average production of one million tons, according to the National Food Supply Company (Conab), is in 5th place in the ranking of main producers and exporters. "This year there has been a 27% reduction in national production, due to exchange rates," he said.

As cotton is a commodity priced in dollars, with the Brazilian real appreciated against the American dollar, cotton farming became less attractive for Brazilian farmers in the harvest that is ending.

In the next crop, however, with a perspective of expansion of international prices, according to Cunha, Brazilian production should grow 15%. With this, the country should reach 7.4% participation in global production.

Another factor generating price increases, according to him, is a reduction of production in Texas due to climate problems. The United States is the second main producer and the greatest global exporter of cotton.

Icac is an inter-governmental association that has as its main objectives helping governments of the countries that are cotton producers and consumers to establish policies for the sector. The theme of the conference this year was the "Environmental and Social Impact of Production and Consumption of Cotton".

According to Cunha, the conference included delegations from 55 countries, apart from Brazil. Among them are representatives from Arab countries like Egypt, Sudan and the United Arab Emirates.

Anba – www.anba.com.br

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