The biggest variable in this balance sheet adjustment, apart from US cotton production, is the export data of Brazilian cotton. USDA has increased the exports of Brazilian cotton by 330kt to 2.45 million tons, while the U.S. cotton exports has been reduced by 270kt to 2.72 million tons. The essence of this is rooted in the competition between Brazilian and US cotton. The worsening weather conditions for US cotton have benefited the export sales of Brazilian and Australian cotton.

The weather in the main cotton-producing regions of Brazil and Australia has been favorable this year, providing a good growth environment for cotton. This is reflected not only in the abundant harvest but also in the cotton quality. Therefore, the deterioration of soil moisture in the US has also raised concerns about the quality of US cotton. This can be seen from the historical export data of Brazilian cotton. The export shipments in July increased to 72,600 tons, compared to 60,300 tons last month and only 19,700 tons in the same period last year, showing a significant year-on-year increase and a recent upward trend in export volume, which is contrary to the usual downward trend in previous years. According to feedback from traders, the new crop of Brazilian cotton is expected to arrive at ports by the end of Aug, and the actual quality of the cotton will be assessed by the market. If the quality is ideal, the subsequent export volume of Brazilian cotton may meet expectations.