Brazilian cotton prices retreated in June after four consecutive months of gains, with the CEPEA/ESALQ index falling 3.65% to 4.1230 BRL/lb between May 29 and June 30. Despite the decline, domestic prices still commanded a 7.7% premium over export parity, giving international buyers a relative advantage.
Export data reveals new trends
In stark contrast to the price trend, export volumes surged. Preliminary data from Brazil's Secretariat of Foreign Trade (Secex) showed exports reaching 146,800 tons in the first 14 working days of June. If the daily shipment pace of 10,490 tons is maintained, June exports could hit approximately 220,000 tons, surpassing the previous record of 160,400 tons set in June 2024.
Daily shipment volumes jumped 57.9% year-on-year, from 6,640 tons to 10,490 tons. Cumulative exports for the 2025/26 season (August 2025 to the third week of June 2026) have exceeded 3.1 million tons, up 11% year-on-year, cementing Brazil's position as the world's second-largest cotton exporter.
The logic behind price-export divergence
This paradox reflects a rebalancing of global cotton supply and demand. On the demand side, major importers like China, Vietnam, and Bangladesh have started releasing pent-up purchases after a period of high-price wait-and-see, strengthening buyer bargaining power and forcing Brazilian sellers to lower quotes. On the supply side, the accelerated arrival of Brazil's 2025/26 new crop has added to near-term supply pressure.
For Chinese textile mills, lower Brazilian cotton prices mean reduced import costs, but exchange rate risks remain. Given the current high BRL/CNY exchange rate, actual procurement costs may exceed nominal price declines. Meanwhile, the narrowing price gap between Brazilian cotton and US/Australian cotton requires buyers to reassess cost-effectiveness.
Impact on global cotton markets
Brazil's export surge is reshaping global trade flows. As Brazilian cotton gains market share, US cotton faces greater competitive pressure, weighing on ICE futures. For Southeast Asian mills, the price advantage of Brazilian cotton may prompt them to shift procurement away from US cotton.
Faster export pace also tests logistics and storage capacity. Congestion at major ports like Santos may worsen, affecting shipping schedules and arrival times. Importers need to book cargo space early to avoid production disruptions.