According to statistics, Brazil’s cotton shipments and exports in November 2022 were 269,000 tons, a year-on-year increase of 62%; while in January 2023, Brazil shipped a total of 124,000 tons of unprocessed cotton (199,000 tons in the same period last year, and the average daily shipment volume was 0.56 million tons, a year-on-year decrease of 40.65%), a month-on-month decrease of 29.4%, and a year-on-year decrease of 37.8%.
Some institutions and cotton-related companies were surprised by this. Previously, all parties judged that because the grade and quality indicators of U.S. cotton in 2022/23 were lower than expected, coupled with weather factors such as cooling, precipitation, and storms, U.S. cotton shipments have been delayed, while another competitor, India, has experienced higher cotton production this year. It is estimated that the gradual recovery of domestic consumer demand has led to a low amount of cotton available for export. Therefore, Brazilian cotton will accelerate its capture of the global market share and is expected to replace the United States as the largest exporter of cotton in 2022/23. However, Brazilian cotton has declined from the past three months. Judging from the “high opening and low trend” of shipment exports, it may be a little early for Brazilian cotton imports to seize the top spot.
Why did the quantity of Brazilian cotton garments drop sharply in December and January? The author believes that it is related to the following three factors:
First, the quotation for Brazilian cotton shipments in 2022/23 not only has no advantage compared to US cotton, but is actually at a slight disadvantage. Judging from the current quotations from various major ports in China, the quotation basis of Brazilian cotton M 1-1/8 (strong 28GPT) for the February/March/April shipment is mostly 14-15 cents/pound (ICE2305+basis), while the same ship The basis difference of futures US cotton EM 31-3 36/37 (strong 28GPT) is also concentrated at 14-15 cents/pound, and the quotations of the two are almost in line.
Second, in January and February, the resources available for Brazilian cotton cargo shipments and exports in 2021/22 are significantly reduced compared with September to November, and the proportion of cotton with M/SLM1-3/32 and below indicators is relatively higher. Compared with China The actual demand matching degree of buyers in countries such as , Vietnam, Pakistan and other countries has declined; coupled with the constraints of factors such as the high lint rate of Brazilian cotton and the still slightly poor consistency, the shipment export of Brazilian cotton has declined or is foreseeable.
Third, since the second half of 2022, the operating rates of cotton spinning mills in various countries, including India, Bangladesh, Pakistan, Vietnam and China, have continued to decline (it gradually stabilized and rebounded in December), and corporate raw material inventories are low (some are even “waiting for rice to be cooked”) However, compared with competitors such as American cotton and Australian cotton, the transportation period of Brazilian cotton is longer (for example, it takes 2-3 months to arrive at the main port in China), and cotton-using companies cannot wait for a long time.
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