Wed Dec 31,
Insights
Brazil's cotton market faced sharp price pressure in 2025 as record output, weak domestic consumption and global headwinds weighed on values.
Domestic prices fell nearly 17 per cent over the year, despite early gains.
Strong exports helped absorb surplus supply, lifting Brazil's share of global trade to 31 per cent and reinforcing its position as the world's leading cotton exporter.
Brazil’s cotton market endured a challenging 2025, with domestic prices under sustained pressure from record supply, subdued consumption and softer international markets, even as exports played a critical role in absorbing excess volumes, as per the Centre for Advanced Studies on Applied Economics (CEPEA).
The CEPEA/ESALQ Index dropped 16.89 per cent over the year, closing at BRL 3.4862 (~$0.64) per pound on December 26, 2025. Export parity declined 16.6 per cent over the same period. In contrast, the Cotlook A Index eased by 6.68 per cent to $0.74 per pound, while the US dollar weakened 10.29 per cent against the Brazilian real to BRL 5.544.
Prices firmed during the first five months of 2025, peaking in May, supported by tight seller behaviour in the off-season, higher international benchmarks and gains in the Cotlook A Index. From June onwards, values fell more sharply as global prices softened, the exchange rate moved lower, remaining 2023-24 stocks were sold and a record 2024-25 harvest approached. High availability and cash-flow needs accelerated the decline in the second half, CEPEA said in its latest fortnightly report on the Brazilian cotton market.
Demand from buyers remained cautious amid weak consumption of manufactured products and comfortable industrial supply through term contracts. By November, trading activity increased for early 2026 and the next season, highlighting the growing importance of the term market.
Exports provided a key cushion. Brazilian cotton shipments reached a record 2.835 million tons in the 2024-25 season, up 6 per cent year on year. Between January and December 2025, exports totalled 2.89 million tons, 4.2 per cent higher than in 2024, with Pakistan, Bangladesh, Vietnam, China, India and Indonesia as the main destinations. Average export prices fell 12.4 per cent to $0.7381 per pound.
According to National Supply Company (CONAB), Brazil’s 2024-25 cotton output is estimated at 4.076 million tons, up 10.13 per cent, supported by higher planted area and productivity. Ending stocks in December 2025 are projected to rise 17.05 per cent year on year.
Globally, the USDA estimates 2024-25 cotton supply at 25.97 million tons, the highest since 2017-18. Brazil accounted for 31 per cent of global cotton trade, overtaking the US as the largest exporter.