Macroeconomics and Cotton Production in Brazil

The Federative Republic of Brazil is the eighth largest national economy in the world and the largest economy in Latin America. With a Gross Domestic Product (GDP) of US$3.2 trillion (PPP) in 2017, Brazil is getting ready to hold general elections during October 2018. Given recent political developments in the country, including the recent incarceration of former President Lula Da Silva (2003-2011), the election of Brazil’s next president will be key to its national economic outlook.

In terms of trade, Brazil is the world’s twenty-first largest export economy. During 2016, the country imported US$135 billion worth of goods and exported US$182 billion, resulting in a trade surplus of US$46.4 billion. Moreover, Brazil’s main export, representing 10% or US$19 billion of the country’s total in 2016, was soybeans. Similarly, the country’s main import that same year, representing 5.4% or US$7.3 billion of all international purchases, was refined petroleum. Meanwhile, Brazil’s main trading partners are China, the United States, Argentina, and the European Union.

Macroeconomics and Cotton Production in Brazil

In recent years, Brazil has devoted over 1 million hectares annually to the harvesting of cotton. During 2016/17, Brazil harvested some 940.000 hectares worth of cotton, which subsequently increased to 1.13 million hectares in 2017/18 and 1.2 million hectares in 2018/19. Simultaneously, the production of cotton has increased from 7 million 480-pound bales in 2016/17 to 8.7 million 480-pound bales in 2017/18 and a projected 9 million 480-pound bales in 2018/19. Likewise, Brazil is a net exporter of cotton. Meanwhile, its cotton imports have been minimal in recent years, accounting for 189.000 480-pound bales in 2016/17; 6.000 480-pound bales in 2017/18; and 4.000 480-pound bales estimated during 2018/19. However, in terms of export, Brazil sold some 2.9 million 480-pound bales of cotton internationally during 2016/17; about 4.3 million 480-pound bales in 2017/18; and is expected to export 4.6 million 480-pound bales in 2018/19.

Currently, the top export destinations for Brazilian cotton are major garment producers, namely Indonesia, Turkey, Vietnam, South Korea, Bangladesh, and China. During 2014/15, Brazil exported a total of 867.778 metric tons of cotton, of which 185.506 metric tons went to Indonesia, 71.157 metric tons were destined to Turkey, and 99.381 went to Vietnam. Meanwhile, in 2015/16, Brazil exported an aggregate of 954.644 metric tons of cotton, of which 141.875 metric tons went to Indonesia, 122.217 were sold to Turkey, and 142.136 metric tons went to Vietnam. Lastly, during 2016/17, Brazil exported 629.145 metric tons of cotton, of which 124.200 metric tons went to Indonesia, 87.335 metric tons were destined to Turkey, and 82.600 were sold to Vietnam.

In terms of national demand, Brazil’s domestic market consumed almost 3.1 million 480-pound bales of cotton in 2016/17. Similarly, it utilized 3.3 million 480-pound bales of cotton during 2017/18 and it is projected to consume 3.5 million 480-pound bales in 2018/19.

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