Farmers bet more heavily on cotton in Brazil's newest farming region
Adds data on projected exports in the last paragraph
By Marcelo Teixeira
LUIS EDUARDO MAGALHAES, Brazil, Nov 25 (Reuters) -Farmers in Brazil's most recent agricultural expansion region are planting more cotton and less corn in the new crop, after a successful previous season that saw Brazil surpass the United States to become the world's largest exporter of the fiber.
Cotton growing continues to make inroads in the sprawling farms around Luis Eduardo Magalhaes in the western part of Bahia state, where the "cerradp" (savannah) climate predominates. The well-defined wet and dry periods have made the region a natural expansion place for cotton growing.
"We plan to plant 25% more cotton this year," said Moises Schmidt, a partner at Agricola Schmidt, an agricultural group that cultivates around 35,000 hectares (86,490 acres) of farmland in Bahia, one of the states forming the new frontier known as Matopiba (Maranhao, Tocantins, Piaui and Bahia).
The movement in Bahia is a sign that Brazil will likely increase its share of the global cotton trade, the latest positive mark in a story that saw the country lead exports in soybeans and corn in recent years. Brazil is also the largest exporter of coffee and sugar.
Bahia is Brazil's second largest cotton producing state, only behind grains king Mato Grosso. Large circular bales of cotton wrapped in colorful plastic covers can be seen piled up in farms and at storage areas of co-ops and cotton processors in the region, waiting to be shipped abroad.
Agricultural consultancy Veeries projects that Bahia cotton area will grow by 9.5% in the new crop that is being planted to a record 379,000 hectares (936,530 acres).
In the case of Agricola Schmidt, it is cutting soy area to give room for more cotton.
"China's soy demand has kind of stabilized, it seems to have reached a peak, so cotton looks more attractive," said Schmidt, referring to the country that over the last decade was the main driver of Brazil's soy production jump. China buys around 70% of all soy exported by Brazil.
Veeries, however, sees soy area in the state little changed in the new crop. The one paying the price for cotton's expansion is corn (first crop), which is seen falling 9.2% to 363,000 hectares (896,990 acres), the smallest area in six years.
"Considering expected profit margins, cotton will give better returns than soy, and much more than summer corn," said Fabio Meneghin, lead analyst and partner at Veeries.
Looking at the whole country, cotton area is seen growing 7.9% to 2.15 million hectares (5.31 million acres), according to consultancy Safras & Mercado, which projects production at 3.89 million tones of cotton lint, 5.6% more.
Veeries expects production to reach 4 million tons and sees potential exports of 3 million tons in the 2024/25 crop year (Sept-Aug), which would be a record for the country.
Reporting by Marcelo Teixeira; editing by Jonathan Oatis
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
