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Global scenario will impact the demand for cotton

Posted by Rafael Moro

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The favorable scenario for cotton margins confirmed a 17% increase for the planted area destined to cotton production in Brazil, in relation to the 2020/21 crop. This is what Rabobank informed in its new report on Brazil's agricultural products.

"The planted area estimate should resume levels close to those reached during the 2019/20 crop year and reach 1.6 million hectares. The production estimate in Brazil, indicates for a volume of 2.7 million tons of plume produced in 2021/22, 100 thousand tons below the initial estimate. The lack of rain during part of the fiber development will limit the production potential during the 2021/22 cycle", he comments.

However, a challenging scenario is beginning to be drawn and should be monitored in the coming months by Brazilian cotton growers and players in the sector. "The first point is the international demand for lint, which, differently from agricultural commodities related to food production, presents greater elasticity in relation to population income," he adds.

"The global inflation scenario associated with the rise in interest rates will lead to a stagnation of global demand for the fiber. Even with the gradual reopening of the textile industries and trade around the world, the economic impacts resulting from the coronavirus pandemic should result in a retraction in the world's GDP and, therefore, the expectation is for the maintenance of the global cotton consumption of 26.4 million tons of lint for the 2022/23 harvest. Besides the demand weakened globally by economic factors, it is also worth mentioning the competition of cotton with synthetic fibers", he concludes.

Translated with www.DeepL.com/Translator (free version)