Economic Observation: Brazilian Cotton Exports To China Can Be Described As "Full Fire"

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According to Chinese customs statistics, in March 2024, China imported 167000 tons of Brazilian cotton, an increase of 950% year on year; From January to March 2024, 496000 tons of Brazilian cotton were imported, a year-on-year increase of 340%. Since 2023/24, 914000 tons of Brazilian cotton have been imported, a year-on-year increase of 130%, higher than 281000 tons of American cotton imports in the same period. Due to the high base and large growth rate, the export of Brazilian cotton to China can be described as "full fire".

According to the report released by CONAB, Brazil exported 253000 tons of cotton in March, including 135000 tons imported by China. From August 2023 to March 2024, China imported 1.142 million tons of Brazilian cotton.

It is worth noting that in the first four weeks of April 2024, a total of 20 working days, Brazil's export of unprocessed cotton showed a strong growth, with a cumulative shipment of 239900 tons (data from the Brazilian Ministry of Commerce and Trade), nearly four times the 61000 tons in the same period last year, and the average daily shipment volume surged 254.03% year on year. China is still the most important destination for Brazilian cotton export and shipment. Some international cotton merchants and trade enterprises predict that compared with the continuous decline in the arrival and warehousing of Brazilian cotton from March to July of the previous few years, the probability of "tail raising" of Brazilian cotton imports this year will rise significantly, and it will be in a state of "constant off-season and leap forward speed increase".

According to the analysis, from August to December 2023, the contract of delayed shipment and delivery of Brazilian cotton caused by many factors, such as serious port congestion in Brazil and the Red Sea crisis, was restarted again, which shifted the peak export period of Brazilian cotton back and prolonged the sales cycle. At the same time, since December 2023, the basis difference of Brazilian cotton has been reduced compared with the previous months, and the basis difference with American cotton and Australian cotton of the same index has been widened, the performance price ratio of Brazilian cotton has recovered, and the competitiveness of Brazilian cotton has been strengthened. The impact of high temperature, drought and little rain in the southwestern cotton region of the United States on lint quality indicators in 2023/24 also gives Brazilian cotton a chance to seize the Chinese consumer market.