Brazilian cotton exporter sees strong shipment in new crop despite coronavirus

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The export of cotton from Brazil, the second global exporter of fiber after the USA, has the potential to add up to about 2 million tons in the period from July 2020 to June 2021, which would repeat the record expected for 2019/20, estimated the director of the National Association of Cotton Exporters (Anea), Miguel Faus.

The projection already considers the impacts of the coronavirus pandemic, which started in China but is not expected to affect business when cotton from the new harvest is ready to be exported. The Asian country, Brazil's main buyer, demands more than 30% of national exports.

In the export trade year ending in June 2020, shipments from Brazil are expected to grow by around 50% compared to the previous season (2018/19), with an increase in the harvest and the Chinese buying more from Brazil, reflecting the trade war with the United States.

The optimism with the volumes remains, despite the economic environment turbulent by the coronavirus, because the manager has the expectation that, in the period of the flow of the new harvest - from July -, the impacts of the coronavirus for the business would be smaller .

With a reduction in the number of cases in China, congestion in Chinese ports is already decreasing, with workers returning to activities.

Faus, also an executive at US-based trading company Omnicotton, said that cotton exports from Brazil, which recorded a monthly record of over 300,000 tonnes in January, are slowing down at the moment, but due to the fact that most of them are contracted the last harvest has already been shipped.

"In the specific case of cotton, as most (of the last harvest) has already been exported, we will continue shipping, but already in a smaller volume. There is no effect (of the coronavirus) on shipments," he told Reuters.

"And, until the new crop reaches volume, I hope that the main problems have already been solved in relation to the virus", added Faus, in reference to the export of the cycle whose harvest begins at the beginning of the second semester.

Brazil has just finished planting the largest cotton area in history. Production is expected to grow 2.7% to 2.85 million tonnes of fiber, according to figures from the National Supply Company (Conab).

VOLATILITY

Confidence about exports in the new harvest comes at a time when producers have already traded around 60% of the future harvest, Faus said, with the exchange rate boosting sales despite downward pressure from international prices.

However, high volatility in the markets hinders business, he pointed out.

"The price of oil has fallen a lot, if this continues it has an effect on the prices of synthetic fibers, the main competitor of cotton," he said.

The executive explained that most of the inputs are dollarized and that, therefore, the exchange rate will mainly help those producers who have already closed their costs.

In the long run, expectations are good for the cotton sector, reinforced Faus, recalling that the national association of producers, Abrapa, has as a goal for the country to produce 4 million tons per crop by 2030, which could allow annual exports of about 3 million tons.

"If Brazil arrives in this production, it will be at a very similar level of exportation to that of the USA," he said, aiming at the North American leadership.




Source: Notícias Agrícolas