By Paulo Santos, Globo Rural — Campina Grande
Brazil’s 2024/25 cotton harvest is underway, and while production prospects are positive, the price outlook is casting a shadow over the sector’s profitability.
The National Supply Company (CONAB) projects that Brazil’s cotton lint production will reach 3.9 million tonnes this season. If confirmed, it would mark the second consecutive record harvest and a 5.5% increase over the 2023/24 cycle.
But prices have been falling steadily. In New York, the benchmark market for Brazilian cotton, prices have fallen 12.2% over the past 12 months, according to Valor Data, Valor’s financial data provider. On Wednesday (26), contracts for December delivery were trading at 68.80 cents per pound, down from 77 cents a year earlier. In June 2023, prices had reached 82 cents per pound.
The situation is squeezing margins for growers like Carlos Alberto Moresco, who produces cotton in Luziânia, Goiás.
“This year, margins are tight, and we are likely to break even at best, especially after I went through a 42-day drought. Initially, I expected yields of 340 arrobas per hectare, but now the harvest will be around 260 arrobas,” he said, citing a metric unit of nearly 15 kilos. “To secure good profitability today, you need to increase yields per hectare.”
Mr. Moresco does not expect any significant change in market conditions. As cotton is one of the commodities most sensitive to macroeconomic factors—such as high inflation—the current environment leaves little room for a price rebound.
According to Marcio Portocarrero, executive director of the Brazilian Cotton Producers Association (ABRAPA), global cotton consumption has been stagnant for 12 years, with synthetic fibers gaining market share during that period.
“At a time when major global economies are facing difficulties, the textile industry is focused on price rather than premium products like natural fibers,” Mr. Portocarrero noted.
Pery Pedro, an independent market analyst, recalled that cotton prices entered a downward trend in April last year, the last time New York futures traded above 80 cents per pound—a level he believes is needed for most Brazilian growers to turn a profit.
The decline has been aggravated by global trade disputes and armed conflicts, including tensions between Iran and Israel. Although Middle East instability has kept oil prices elevated, Mr. Pedro sees little chance of cotton benefiting from that dynamic.
Generally, rising oil prices make synthetic fabrics more expensive, which can drive demand for natural fibers like cotton. But that correlation is unlikely to materialize this time, Mr. Pedro warned.
Despite falling prices, Mr. Portocarrero of ABRAPA does not expect a reduction in Brazil’s cotton acreage for the 2025/26 season. He anticipates farmers will maintain the more than 2 million hectares currently under cultivation.
However, he believes only experienced growers will be able to ride out the current downturn.
“Those already invested in cotton will stick to their planting plans. But anyone looking to enter the sector now will have to wait for better price conditions. It’s essential that we continue working on quality and sustainability efforts because at some point, these tough times will pass, and we must be ready to meet the demands of our key customers,” Mr. Portocarrero said.
