Mato Grosso Cotton Margins Narrow as Full Costs Outrun the Price
Mato Grosso cotton now sells for enough to cover cash costs but not full costs, IMEA figures show, as land rent climbs and world prices ease. The post Mato Grosso Cotton Margins Narrow as Full Costs Outrun the Price appeared first on The Rio Times .
Growers in Brazil's largest farm state, Mato Grosso, are facing tight margins on their cotton crops as full costs exceed the market price. The Instituto Mato-Grossense de Economia Agropecuária (IMEA), which tracks farm costs, reported that a hectare of cotton will cost R$18,709.02 to produce, while growers are only receiving R$15,250.61 per hectare in cash. This leaves a shortfall of R$3,458.41 per hectare, or about US$635, that must be covered by the farmer.
The effective operating cost, which includes cash expenses like seeds, fertilizers, chemicals, fuel, labor, and land rent, stands at R$15,250.61 per hectare. To break even, the price per hectare would need to reach R$147.47, or about US$28.68 per arroba (15 kg). However, the current market price is hovering around 76 US cents a pound, which is roughly 12% below the full-cost threshold.
The main driver of the higher costs is rent, which rose 4.72% in August alone, with fertilizer prices also contributing to the pressure. While input spending on soybeans, Mato Grosso's other major crop, rose 3.35%, fertiliser prices increased by 18.73% compared to the three-year average. This has made it more expensive for farmers to produce both crops simultaneously, as they are often planted in the same fields.
Despite this, cotton yields in Mato Grosso reached a record high of 323.37 arrobas of seed cotton per hectare last season. Nevertheless, the state's cotton area fell 11.18% to 1.37 million hectares due to the high costs and unattractive prices. Conab, Brazil's federal crop agency, anticipates a 3.23% decrease in the national cotton yield for the upcoming 2026/27 season, citing uncertainties around El Niño.
Written by urgent.news from The Rio Times's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
