Cotton: Perspective is Higher Cost

Posted by Marina
The 2019/2020 crop should be marked by higher costs for cotton producers, according to information contained in the report on perspectives for Brazilian agribusiness, carried out and released by Rabobank. This is mainly due to inputs valued by the high exchange rate.

“On the other hand, featherweight selling prices tend to be lower than those seen in the previous cycle, pressured by international market price levels (closer to USD 0.65 / lb) - although the devalued real against dollar soften the fall in the price of the feather, when analyzed prices in local currency (R $) ”, says the text.

According to the Mato Grosso Institute of Agricultural Economics (IMEA), about 63% of the expected production of the 2019/20 cotton crop of Mato Grosso, Brazil's main feather-producing state, was traded until November 19. “With a significant portion of these deals closed with future exchange rate levels for December / 20 above R $ 4.00, Rabobank estimates that average trading prices tend to be around R $ 85 / @ feather . In this scenario, the estimate is of operating margins between 25% and 30% in the 2019/20 cycle to the cotton farmer, ”he adds.

“Despite this perspective of tighter margins in the 2019/20 crop year, compared to the previous ones, it is estimated that there are no significant negative impacts on the area. Rabobank expects the area for cotton in this cycle to be close to 1.55 million hectares compared to 1.6 million hectares in the previous season. Following the productivity trend line, production is estimated at 2.6 million tons of feather in the 2019/20 crop, ”he concludes.

Source: Agrolink