Brazil exports of cotton to China and other Asian countries are expected to rise for the 2018/19 marketing year, partially stemming from US-Sino trade tensions, the US Department of Agriculture (USDA) said in a recent report.
Exports are forecast to reach 6 million bales, up from 4.2 million bales from the banner 2017/18 season, according to the USDA.
The USDA also cited “continued improvement in grading and quality of Brazilian product,” as a secondary reason why demand for Brazilian cotton from China is expected to rise.
This report comes a day after the USDA said US cotton exports to China tumbled nearly 50% in the first two months of the 2018/19 marketing year, “hindered” by the US-China trade war. Earlier this week, the cotton market was rejuvenated after the world’s two economic superpowers had agreed on a 90-day trade truce period to hammer out a more permanent agreement.
That excitement later faded as the arrest of a top Chinese technology executive cast further shadows on US-China trade relations. Meanwhile, Brazil’s 2018/19 marketing year cotton area is expected to reach 1.4 million hectares, an increase of 19% compared to the previous marketing year. The planted area expansion is a result of rising cotton prices & strong export demand, the USDA said.
Domestic consumption is forecast at 3.5 million bales, which is a marginal 3% increase compared to last marketing year, based on increased investment and “an increase in economic activity that is expected on the back of positive market sentiment for the incoming administration of President-elect Bolsonaro,” the USDA report said.