Brazilian cotton market (Harvest 2014/15)

Brazil is the fifth largest cotton producer in the world, despite the fact that Asia as a region is responsible for 70% of the global output. Almost 60% of Brazilian production is exported, so Brazil is amongst the top players in terms of global trade. Despite the rising demand in synthetic fibers, the growth of consumer purchasing power in developing countries has promoted a slight recovery of natural fiber consumption such as cotton.

For the 2014/15 harvest the cotton crop area in Brazil was reduced by some 13% as compared to the 2013/14 harvest.  Partly responsible for this reduced area was the commodity price which had fallen 20% in the second semester of 2014 as compared to the first quarter; due to a higher worldwide stock. Prices, however, recovered in 2015, changing the expectation for the upcoming season.  As such cotton crop area for 2015/16 cycle in Brazil shall be reduced only by 1%.

The adoption of biotechnology has been increasing every year. In the 2014/15 cycle, 97% of the area was cultivated with herbicide-resistant varieties and 84% of the area was planted with Bt technology. Clearly much of the area was planted with both (stacked) traits.  That large adoption clearly affected crop protection products management.  However, due to the vast range of both weeds and insects to be controlled in cotton, the impact was not felt as much as in for example soybean and/or maize.

Sector wise only fungicides showed sales increase as compared to the 2013/14 harvest. Growers added one preventive application to fight against Ramularia spp. Herbicides saw reduced sales due to price reduction and the negative impact of biotechnology;  conventional varieties usually demand 26% more herbicides than transgenic ones. Growers are, however, concerned about the occurrence of resistant weeds. Many growers have already found difficulty in controlling some weeds due to the intensive use of non-selective herbicides which are used in the transgenic systems.

Proportionally, Bt varieties increased by 10% in terms of area, affecting the caterpillar control market. Consequently the use of products against caterpillars fell 15% as compared to the previous season. The use of Bt varieties promotes savings in crop protection products as the cost per hectare is reduced by half when compared to conventional varieties. However, growers are aware of resistance development, especially when it comes to Spodoptera.  Pest resistance is, however, of secondary importance as compared to weed resistance.

Growers are investing in boll weevil control and control of aphids.  The main products used for such targets saw price reductions of some 10-15%, so farmers where able to increase the number of sprayings. Overall therefore there was a balance in sales for such products.

The purchase of seeds already treated with ST insecticides has been increasing and represents 70% of the total seed treatment market.  Pre-treated seed is also in fact some 20% cheaper than on-farm treatment, as seed multipliers can purchase ST products at a better price due to the volume involved in the negotiation.

It is expected that the insecticides market in cotton will fall within five years, but in the meantime it shall recover in part due to the  launch of new products. More than 15 insecticides sprayings are done on average, and that requires high investments in application technology.  As most of production is concentrated in very big areas, the search for economically feasible solutions in pest control is an ongoing challenge.

Author:

Erica Franconere

Market Specialist Kleffmann Group Brazil