US cotton exports hit 9-year low amid Brazilian competition, weak Chinese demand

US cotton exports for the 2024/25 season are projected at 11.3 million bales, a decline of over 400,000 bales from the previous year, marking the lowest level in nine years. While domestic cotton supplies are higher, the drop in exports is driven by competitive pricing from Brazil and a significant decrease in demand from China.

Brazil's cotton production for 2024-25 is expected to reach 16.9 million bales, a 16 per cent increase over the previous year’s record. Coupled with a depreciating currency, this has made Brazilian cotton more competitively priced, with basis levels around 800 points compared to over 1,200 points for US cotton. Over the past five years, Brazil's currency has fallen nearly 40 per cent against the dollar, further enhancing its cost advantage.

In addition to Brazilian competition, global demand is weakening, with world cotton imports forecast to decline by over 2 million bales. China’s cotton imports are expected to fall by more than 40 per cent, due to reduced government reserve demand. From August to November 2024, US cotton sales to China dropped sharply, amounting to just 700,000 bales, the lowest level in nine years, as political uncertainty dampened forward buying.