Data released by CONAB shows, Brazilian cotton output may increase by 32.9 per cent to reach 2.665 million tonne by in July, 2018/19. Exports may increase by 60.3 per cent to 1.5 million tonne. Domestic consumption is likely to rise by 2.9 per cent to 0.7 million tonne. Therefore, ending stocks may rise by 70.7 per cent to 1.135 million tons, for the first time to be above 1 million tons since 2011.
The large increase of cotton output makes the supply glut more obvious. Compared with the data released in June, the consumption and exports are revised lower somewhat, leading to higher ending stocks. In early Aug, global stock and commodity market turns bearish, and CONAB is likely to revise lower the consumption and exports in Aug. Under the continual weakness of global cotton textile industrial chain, the supply glut of Brazilian cotton is more obvious with higher cotton output.
In details, cotton areas in Brazil rose by 36.2 per cent year on year, and in the major cotton producing areas, Mato Grosso and Minas Gerais, areas increased by 38.3 per cent and 68 per cent respectively. For yield, the average level moved lower slightly by 2.5 per cent to 1665 kg per hectare, but the higher areas stimulated the higher cotton output.
Currently, it is still the harvest period for Brazilian cotton, and US cotton crop is setting bolls. China will start the picking in Sep in earliest, and the harvests will be around Nov in India. For the largest four cotton producers in the world, Brazilian new cotton supply is quite ample at present.
