Brazilian cotton exports are shifting from a breakneck pace in the second quarter to a more moderate growth trajectory. In the first four weeks of July, the country exported a total of 127,650 tons of cotton, with a daily average of 7,090 tons — a 28% increase over the same period last year. While this figure would be impressive in any normal year, it marks a clear deceleration compared to Q2's year-on-year surges of 54.85%, 51.5%, and 63% in April, May, and June respectively. The global supply rhythm of Brazilian cotton is clearly hitting the brakes.
Signals and Causes of the Slowdown
Data from Brazil's Foreign Trade Secretariat (Secex) shows that while July's four-week export volume already approaches the entire July 2025 total of 127,250 tons, the daily growth rate has halved from Q2's over-50% levels to 28%. This is not due to production issues but rather structural shifts in global demand. China, the largest buyer of Brazilian cotton, built up substantial port inventories after heavy purchases in the first half of the year, naturally slowing import pace. Meanwhile, the upcoming U.S. cotton crop is strengthening expectations, prompting international buyers to reallocate orders between Brazilian and U.S. cotton.
Another critical factor is the Brazilian real's exchange rate. The real's depreciation against the U.S. dollar in Q2 incentivized exporters to ship aggressively, but the currency has stabilized since July, reducing the urgency to sell at low prices. This suggests Brazilian cotton FOB quotes may gradually firm, squeezing mills that rely on Brazilian cotton as a cost-effective alternative.
Industrial Impact: From Scramble to Precision
The slowdown in Brazilian cotton export growth has multi-dimensional effects on the global textile chain. First, price expectations: Q2's heavy arrivals had suppressed international cotton prices, but with supply growth slowing, the floor under ICE cotton futures will be firmer. Chinese mills that continue purchasing at Q2's pace may face the disadvantage of chasing rising prices.
Second, inventory management. China imported record volumes of Brazilian cotton in H1 2026, causing congestion at some bonded warehouses. The expected decline in July arrivals provides a window for mills to digest stocks. However, the "front-loaded" export pattern could create a supply gap in Q4, especially for higher-grade cotton, intensifying competition.
For Southeast Asian mills, Brazilian cotton remains a key option for blending. Factories in India, Vietnam, and Indonesia tend to switch from U.S. to Brazilian cotton when the former is expensive. If Brazilian cotton supply tightens further, these regions will face upward pressure on spinning costs.