Brazil's cotton exports, after three consecutive months of explosive growth, are showing clear signs of cooling in July. According to data released by Brazil's Secretariat of Foreign Trade (Secex), average daily exports in the first four weeks of July reached 7,090 tonnes, up 28% from the full-month daily average in July 2025. However, compared to year-on-year growth rates of 54.85% in April, 51.5% in May, and 63% in June, the July figure represents a significant deceleration.
What does this shift mean? First, Brazil's supply elasticity is diminishing. The 2025/2026 crop set a record, but after three months of heavy shipments, the pressure on available stocks has eased. Second, price factors are coming into play—the discount of Brazilian cotton relative to US and Australian cotton has narrowed, reducing its appeal to spinners.
The Industry Logic Behind the Export Slowdown
In absolute terms, Brazil exported 127,650 tonnes of cotton in the first four weeks of July, already exceeding the 127,250 tonnes shipped in the full month of July 2025. But the slowdown in daily export growth is more telling. From April to June, average daily exports were 6,040 tonnes, 5,770 tonnes, and 6,530 tonnes respectively, with year-on-year gains all above 50%. In July, daily exports rose to 7,090 tonnes, but the growth rate dropped to just 28%.
This volume-growth-with-decelerating-speed pattern reflects an adjustment in downstream buying. China, Vietnam, and Bangladesh—the top three buyers of Brazilian cotton—built substantial inventories during the first half of the year, and by July, procurement turned more cautious. Meanwhile, international cotton prices corrected from late June to mid-July, prompting spinners to adopt a wait-and-see approach and delay purchases.
Logistical bottlenecks also contributed. Major ports like Santos experienced extended vessel queuing times in July, forcing some shipments to be postponed to August. While this won't change annual export volumes, it will reshape the monthly distribution.
Ripple Effects on Global Cotton Prices and Supply Chains
The most immediate impact of Brazil's export slowdown is the easing of downward pressure on global cotton prices. Earlier, Brazil's bumper crop had been a key factor depressing the international price benchmark. As export growth moderates, US and Australian cotton regain competitiveness, especially in terms of quality and spinning performance.
For Chinese spinners, the cooling of Brazilian cotton means a shift in raw material options. In the first half of 2025, Brazilian cotton flooded the Chinese market with its price advantage, squeezing out US and Indian cotton. But by July, the price gap between Brazilian and US cotton had narrowed from 5 cents to 2-3 cents per pound, eroding the value proposition. Chinese mills may need to reassess their procurement mix, increasing the share of US cotton and Xinjiang cotton.
For Vietnam and Bangladesh, which are rapidly expanding spinning capacity, Brazilian cotton remains a crucial source, but buying patterns will shift from 'panic buying' to 'just-in-time procurement.' This objectively helps reduce raw material inventory costs but also means Brazilian exporters need more flexible pricing to maintain market share.
Outlook for H2 2026 and Key Variables
Looking ahead to the second half of 2026, whether Brazilian cotton exports can regain momentum depends on three variables. First, the progress of the new crop—2026/2027 planted area is expected to decline slightly, but higher yields could keep total output high. Second, currency fluctuations—if the Brazilian real continues to weaken, it will enhance export competitiveness. Third, China's import quota policy—if Beijing issues additional sliding-duty quotas, Brazilian cotton will benefit directly.
In the near term, August and September represent a window before the Northern Hemisphere new crop arrives, and Brazil will remain the primary global supplier. But daily export growth will likely stay in the 20%-30% range, far from the 50%+ surge seen earlier. Spinners should use this window to optimize inventory rather than chase prices at elevated levels.