Brazilian cotton farmers and traders are ready to profit from a rally fueled by two disparate events: the Iran war and drought.
Cotton prices are up more than 20% this year and this month touched the highest since 2024. Demand is shifting to the natural fiber after the effective closure of the Strait of Hormuz slowed shipments of naphtha, a petrochemical byproduct used to make competing synthetic fibers. Forecasts calling for dry weather in US growing areas added to the rally.
All that has created an opening for well-supplied Brazilian farmers to increase exports and capitalize on higher prices.
Brazil is on track to post record cotton sales of 3.1 million tons in the season ending in June, according to export group Anea. That would be up roughly 9% from the previous season. Demand from China, along with India’s temporary removal of import duties, boosted shipments, trade data shows. The South American country is the world’s top exporter of the commodity, surpassing the US.
Farmers like Sergio Pitt, who grows cotton in Brazil’s Bahia state, are ready to cash in. Before this year’s rally, he’d locked in sales for about a third of his production. After futures spiked, Pitt quickly made deals to increase his sales to 90% of the crop he will start reaping next month.
