MUMBAI (Commoditiescontrol) - Brazil is estimated to produce 6.5 million bales cotton in the upcoming marketing year (MY) 2015-16, down 6 per cent from the current year, as per USDA’s latest Global Agriculture Information Network (GAIN) report.
The USDA stated that lower cotton prices the world over and Brazil’s several economic challenges may prompt country’s farmers to plant less acres of cotton in the next MY. Planted area for cotton in 2015-16 may drop to 950,000 hectares. In Brazil, decisions to plant cotton and possible expansion next year are currently linked to stocks situation in China. The uncertainty in market as a result of the expected high volumes of cotton stocks in China continues to put pressure on global prices. In addition, low oil prices are making synthetic materials more affordable, which directly compete with cotton in Brazil.
Farmers may opt to plant less cotton and more soybeans and corn, which are expected to have higher returns than cotton. Also, as farmers begin to make planting decisions for the 2015-16 crop in July, the expected weak value of the Brazilian Real (Real) will have a major impact. Purchases of fertilizer are expected to stagnate as a result of the higher costs due to the devaluation of the Real.
As per the report, Brazil’s domestic cotton consumption in the season would be 3.6 million bales, lowest levels in 10 years. On the contrary, cotton exports are seen at 3.6 million bales due to weak domestic currency. The Brazilian Real reached at 3.25 Reals in mid-March, its lowest value since April 2003. The currency is likely to stay over 3 Reals per Dollar for the rest of 2015, making the export market look promising.
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(By Commoditiescontrol Bureau; +91-22-61391533)
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