Cotton prices expected to remain under pressure from oil

Domestic cotton prices recorded their third consecutive monthly decline in August, falling 2,7% in Rondonópolis, Mato Grosso, to R$3,81/lb. This reflects the decline in international prices and the progress of the harvest and processing in Brazil.

According to Conab, the 2024/25 harvest reached 73% completion by August, below the 88% achieved in the same period in 2024 and the five-year average (87%). The largest delays were recorded in Mato Grosso and Bahia, the main producing states. With record production, the country is expected to have a supply of 4,7 million tons, considering initial stocks and harvest, which reinforces the need for increased exports.

In August, cotton shipments totaled 77 tons, a 33% drop compared to the same month last year. This represents the worst start to the season (August-July) since 2022/23, when 64 tons were shipped. For 2025/26, exports are expected to reach 3,1 million tons of lint.

"Given the comfortable global supply, weak global economic growth, trade uncertainties, and the prospect of further declines in oil prices, we see more factors for oil prices to remain stable or fall than for appreciation," says Francisco Queiroz, a specialist at Itaú BBA's Agro Consulting.