Brazil’s Mato Grosso region only planted 79,656 hectares to first-crop cotton, which is down sharply from any time in recent history. The reason? The crop is quickly moving to a second crop, only as yields on a second crop after soybeans have proved near par with the full season crop, which has increased the profitability of the crop. A record 972,830 hectares is estimated by IMEA to be planned for the second crop, which is up over 45% from last year. This gives Mato Grosso a record 1,052,487 hectares of cotton.
The IMEA estimates the seed cotton yield at 277.8 arrobas a hectare, which is expected to produce 1,791,683 tons of lint, or 8,231,883 bales. New gins are being constructed, and new pickers are ordered as the state prepares for this much bigger crop. New growers also face challenges regarding the management of quality.
Seed quality has improved, which is giving the crop a boost from the start. Ginners are upgrading gin yards with paved surfaces, as ginners are forced to improve practices to maintain quality. The Brazilian harvest occurs rapidly, as it is followed by soybean planting, with bales having to be rapidly moved to gin yards. In many cases they will spend some time in the gin yard and need proper management when the wet season returns. The lint is also stored on paved yards on covered pallets. This will increase their challenges as the crop increases. The next big growth area will be in gin and warehouse management, which will require the industry to address the concerns of the insurance industry.
The local index of a 41-4-35 landed Sao Paulo has weakened slightly during the last week, as the Real/USD rate has weakened. The index closed February 7th at 79.52 US cents a lb., down from the January 31st rate of 80.58 cents. The Real/USD rate ended the week at 3.7176. Late season ginning, as we have discussed before, has revealed a mixed quality. Thus, discounted quality offers are now in circulation in export markets.
Brazil exports in January 2019 reached 18.5 billion USD, which reflected the highest level in 30 years and was up 9.1% from a year ago. The data revealed increased sourcing of manufactured goods from Brazil. Top products were oil platforms, airline equipment, and planes and agribusiness products. January cotton exports totaled 108,867 tons, up from year-ago shipments of 79,127 tons. China was again the top export market at 35,466 tons, followed by Bangladesh at 15,349 tons. Brazil export shipments to China in the last three months have totaled over 1.176 million bales, which may be a record.
Source: Jernigan Global