China and Brazil's cotton industry will have more room for development

China is one of the world's major cotton importers. Since the 2018/19 season, Brazil's cotton exports have surpassed India and become the world's second largest cotton exporter. According to the statistics of natural years, from 2017 to 2021, China's demand for Brazilian cotton imports continued to rise, and the quantity increased from 66,400 tons to 643,900 tons, accounting for nearly 30% from less than 10%. Although the import volume in 2022 decreased slightly to 577,300 tons, but still accounted for nearly 30%. From January to February 2023, China imported 97,000 tons of Brazilian cotton, accounting for 43.01%. Brazilian cotton is favored by domestic cotton enterprises.

 

 

According to monthly statistics, due to differences in the time of cotton listing and concentrated arrival in Hong Kong, the proportion curves of cotton imports in each country roughly show cyclical changes. The time for China's imports of Brazilian cotton to Hong Kong is from November to January of the following year. Judging from the trend of the curve, Brazilian cotton has a relatively high cost-effective advantage, and it is becoming more and more common that the monthly import proportion exceeds 50%, which is evenly divided with the proportion of American cotton.

 

 

In recent years, due to the limited development of Brazil's domestic cotton spinning production capacity, the main way to destock cotton is export trade, and the export volume has always been higher than the consumption volume. From 2017/18 to 2022/23, Brazil's cotton production will be 2-3 million tons, and its consumption will be 580,000-740,000 tons. The oversupply will make the end-of-period inventory of Brazilian cotton backlog. Brazil's cotton export volume in and before the year was less than 910,000 tons. With the increase in China's purchases, Brazil's cotton imports increased to 2.4 million tons in 2020/21. Global textile and clothing consumption in 2022/23 is weak, and Brazil's cotton export volume is estimated Still close to 1.7 million tons.

 

 

Excluding the bull market of China's textile and clothing in 2021, although the amount of China's textile imports will continue to decline from 2018 to 2022, the amount of China's textile imports from Brazil will show an upward trend. In 2016 and 2017, China's textile imports from Brazil accounted for less than one percent, while in 2022 the imports accounted for 13.35%. From January to February 2023, China's textile imports amounted to US$1.395 billion, of which Brazil's textile imports amounted to US$224 million, accounting for 16.05%.

 

 

From 2016 to 2020, China's textile export value has a significant growth trend. Due to rising raw material prices, the export value in 2021 and 2022 will still exceed 145 billion US dollars. Also limited by Brazil's textile production capacity, there is limited room to increase the amount of Chinese textile exports to Brazil. However, unlike the shrinking trend of China's overall textile exports from January to February 2023, the export value to Brazil was 743 million US dollars, accounting for 3.87% of the total. , after the price of raw materials fell, it was still higher than the amount in the same period in 2019-2022.

 

To sum up, for a long time, China and Brazil have been important trading partners in the field of agricultural products including cotton. Conducting trade in local currency will reduce costs and promote bilateral trade and investment facilitation. The field of cotton textiles will have greater development space.