Ideas that lower world cotton prices are dampening
production prospects, and raising prospects of eroding record world
inventories, received another fillip when US officials followed up a downgrade to Australia's harvest with one for Brazil too.
US Department of Agriculture officials in Brasilia downgraded
by 200m bales to 6.3m bales their forecast for the Brazilian cotton crop in
The prospect of a 27% drop in production year on year reflected
in part a knock-on effect from the slow start to Brazil's soybean seedings which,
in implying a later-than-hoped-for harvest, will lower farmers' enthusiasm for
a follow-on cotton crop.
Second crops of corn and cotton, while enjoying strong 2012
results in the major producing state of Mato Grosso, are a high-risk
proposition, grown in what is often a dry part of the year.
'Prices remain unfavourable'
However, the drop of some two-thirds in cotton prices from a
record high in March last year had also played a part.
"Futures prices for cotton remain unfavourable, and have
contributed to a 30% year-on-year reduction in estimated planted area," the
USDA staff said.
The downgrade follows a cut last week to estimates for the harvest
in Australia, which is competing with Brazil for second rank in world cotton
exports, after the US, and offers extra evidence of price cuts fostered by an
expected rise in world stocks to a record high, at last, impacting farmers'
appetite to grow the fibre.
The International Cotton Advisory Committee, which will
later on Monday unveil its latest monthly cotton report, In November upgraded
its estimate for world cotton production in 2012-13 by 400,000 tonnes to 25.88m
tonnes, noted that "despite the sharp fall in cotton prices… cotton
plantings did not drop much".
The small decline was "due to above-average prices at
planting time, government policies and favourable weather in some major
producing countries" in the northern hemisphere, the committee said.
Indeed, in the northern hemisphere, while the USDA's Islamabad
office also cut forecasts for Pakistan's 2012-13 cotton production, the downgrade
reflected reduced expectations for yields rather than reduced ideas over
The revision reflected a range of weather setbacks,
including a lack of water in some areas, thanks to an unusually slow pace of
glacier melt, June heat which promoted outbreaks of cotton leaf curl virus, and
floods which left the equivalent of some 1.0m bales of cotton with "considerable
The area of Pakistan cotton harvested this season was
estimated at 3.0m hectares, the same as in 2011-12
The country's appetite for the fibre is being supported by
concessions granted by the European Union for imports of Pakistan cotton, as part
of an aid package after the 2010 floods.