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After high harvest, cotton market is impacted by the Coronavirus pandemic

Posted by Marina
Unlike soy and corn, grains used for food and inputs in the agricultural production chain, cotton is a commodity linked to the textile and cosmetics industry. Thus, cultivation, on farms across Brazil and the world, has an important link with walkways and retail. In Brazil, the harvest of the new crop has been gaining pace, but with marketing challenges in the midst of the coronavirus pandemic.

The Consultancy spoke with the cotton purchasing manager at Companhia Valença Industrial and coordinator of the Cotton Committee of the Brazilian Textile and Apparel Industry Association (ABIT), Sérgio Armando Benevides Filho, and with stylist Isaac Silva, in order to understand how this commercial dynamic between the two links works.

According to the projections pointed out by Benevides Filho, this year alone, Brazil will produce 2.90 million tons of cotton. Domestic consumption will absorb 720 thousand t, that is, 60 thousand t per month. However, according to him, the pandemic put pressure on world consumption, going from 26 million to just over 22 million, a decrease of 15%.

“The recovery is slow, the textile sector is one of the ones that has been suffering the most from the pandemic, especially the bottom, that is, pants, shorts, because now everyone is in lives / videoconferences, and nobody needs to know what they are wearing on the bottom. People are out of the crowd, without parties, they are basically working from home ”, ponders Benevides Filho.

DATAGRO also asked stylist Isaac Silva how the pandemic impacted the sector at the point of manufacture. “It affected not only fashion, but all sectors. This is one of those moments that mark the world. As we no longer have wars, as in the 20th century, we are going to live health wars against viruses ”, he pointed out. "The industry will need to make technological fabrics, antibacterials, so as not to have to wash clothes all the time," said Silva.

In addition to betting on changes in textile production, with expectations of better demand after the peak of the pandemic, the stylist also highlights the ignorance of some involved in the fashion world with the raw material: cotton, but points out the importance of traceability. “I want this to be a trend, for the creator and the consumer to know what they are buying. From the farm to the walkway, from the stores to the end customer ”.

China, the United States, India, Pakistan, Uzbekistan, Brazil and Turkey account for about 80% of all cotton production in the world. However, in global trade, there are still preferences for some markets with the claim that they would be of higher quality, for example.



“The big issue is that US cotton has control over the HDI [High Volume Instrument] and they do the storage by batch, so they place the batch with length, resistance, micronaire and quality, all similar”, says Benevides Filho who, sees this technological advance in Brazilian production, despite the disparity between countries.

“One of the differentials we can have is the issue of stacking bales per lot, and there is the issue of seed control. The idea is to get the highest quality seeds to give them greater uniformity, but it is a very delicate subject ”, adds Benevides Filho.

Asia

The trade conflict between the USA and China benefited different agricultural sectors in Brazil, such as livestock, soy, corn and in the case of cotton it was no different. The continent is one of the main markets for Brazilian featherweight, despite having important domestic production.

“Last year, this trade war between the two was excellent for the sector. China imported more cotton from Brazil than from the USA and it was precisely the year that Brazilian production registered a record. China used to buy 10% of Brazil before and started to buy 35% of what they imported ”, explains Benevides Filho. The volume shipped was close to domestic consumption in Brazil.

Other countries in the Asian market, one of the largest consumers in the world, are on the radar of Brazilian trade. “Marcelo Duarte from the Brazilian Association of Cotton Producers (ABRAPA) is opening an office in Singapore precisely to propagate Brazilian cotton in the world”, says the ABIT representative. ABRAPA is supported by the Brazilian Export and Investment Promotion Agency (Apex-Brasil) in the project.

Industrial consumption of fibers and filaments in Brazil

Cotton is the natural raw material most used by the textile industry. In 2019, according to information from ABIT, the commodity represented 46.1% of the use by the industry, that is, 720 thousand tons. Synthetic polyester comes in second. The national industry absorbed 36.3%, that is, 566 thousand tons.

Export

In addition to being a major domestic consumer, Brazil is an important raw material exporter, with China as its main buyer in 2019, according to data from the Ministry of Industry, Foreign Trade and Services (MDIC) through the Comex Stat . The Asian giant generated US $ 820 million in revenue and absorbed 31.5% of the total shipped.

Vietnam comes in second place, with revenue of US $ 326 million. The country imported 13.7% of the total shipped.


Source: DATAGRO

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