Planted area for cotton in Argentina is forecast to decrease to 400,000 hectares (ha) in marketing year (MY) 2012/13 due to the fall in the price of cotton.
THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY
USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT
GAIN Report Number:
Post: Buenos Aires
2012 Cotton Report - Voluntary
Cotton and Products
Planted area for cotton in Argentina is forecast to decrease to 400,000 hectares (ha) in marketing year
(MY) 2012/13 due to the fall in the price of cotton and decreased competitiveness in relation to
soybeans. With average yields, production is expected to reach 872,66 bales (B), MY 2011/12 saw
approximately 60,000 ha losses out of 540,000 planted ha and lower than average yields due to drought,
with lint production expected at 918,592 B.
Planted area is expected to decrease to 400,000 hectares (ha) in marketing year (MY) 2012/13, down
from 540,000 ha in MY2011/12 and 618,000 ha in MY2010/11. The decrease is expected to occur due
to many issues including the fall in the price of cotton in relation to previous years as well as the
decreasing competitiveness of cotton in relation to soybeans. While planted ha are set to decrease in
MY2012/13, production per hectare is expected to increase in relation to MY2011/12 where drought
caused loss in yields. In MY2012/13, the weather is expected to be normal with cooler temperatures
and more rainfall and yields expected to normalize.
Cotton production for MY 2012/13 is expected to decrease slightly and is expected to reach 872,663 B,
down 45,929 B from the previous year. Cotton production in MY2011/12 is characterized by losses of
ha, quality reduction, and decrease in production per hectare that resulted from drought conditions
caused by a La Niña weather pattern. In fact, there was a 60,000 ha drop in harvested area (480,000 ha)
from planted area (540,000 ha).
There are many conflicting numbers reported on cotton area, production, loss and productivity per
hectare. FAS Buenos Aires estimates are based off of a large survey of post contacts in the cotton
Cotton is produced in the north of the country, primarily in the provinces of Chaco, Santiago del Estero
and Formosa which account for more than 90 percent of production. This region was among those most
affected by La Niña weather pattern of marketing year (MY) 2011/12, which caused drought and higher
than normal temperatures during the months of December 2011, and January and February 2012.
Farmers in this region tend to view cotton a safer crop than alternatives as it performs better in water
stressed periods. Alternative crops to cotton that are grown in this region are soybeans followed by
sunflower. Cotton and soybeans production competes for land use, depending on which is more
profitable for producers that have the equipment to harvest both.
Forecasted planted area for MY2012/13 is expected to be 400,000 ha. Sources have been contentions to
this number, with industry and government sources stating that planted area is liable to change
depending on price for cotton and alternative crops as well as availability of finance. MY2012/13
planted area is a reduction from previous years; with MY2010/11 seeing a ten year high of 618,000
planted ha. MY 2011/12 saw the second highest number of planted area in the last ten years reaching
540,000 ha, bolstered in part by the fact that at the beginning of the planting season (August) prices for
cotton were still above $1USD/LB. During the growing season, however, high temperatures and limited
rainfall affected the cotton producing region. Crop losses during this year saw an estimated 60,000
hectare gap between planted area and expected harvested area, which is now forecast at 480,000 ha.
This gap can be directly attributed to the La Niña weather pattern. MY2010/11 saw relatively little area
losses (18,000 ha) with final harvested area reaching 600,000 hectares.
Marketing year 2010/11 2011/12 2012/13
Planted ha 618,000 540,000 400,000
Harvested ha 600,000 480,000 400,000
Production, lint (MT) 300,000 200,000 190,000
Production, lint (480 lb. bales) 1,377,889 918,592 872,663
Yield kg/ha 500kg 416kg 475kg
Yields are expected to normalize in MY2012/13, following a crop year severely affected by the drought
with lint production expected to reach 872,663 B. Lint production MY2011/12 saw losses in area as
well as per hectare productivity due to the drought. According to contacts, raw cotton production per
hectare in MY2011/12 is considerably down from its 1500 kilo average, with some areas seeing as
much as a 40 percent reduction in yields. Consequently production is expected to reach918,592 B, a
significant drop from lint production in 2010/11 which was1,377,889 B. All three marketing years are
in the upper range of the previous 10 years lint production; which ranged from 298,542 B, to 1,377,889
B, with an average of 721,095 B.
According to post contacts, in addition to losses in area due to the drought in MY2011/12, Argentine
cotton is expected to be of lower quality. Fiber length has been reported to be of shorter staple this
marketing year when compared with previous marketing years, with micronaire running higher than
normal for Argentine cotton.
Argentine cotton producers received a respite from the cotton boll weevil in MY 2011/12 as populations
were suppressed during the drought. Losses in MY 2012/13 are expected to rise as weevil populations
rebound as the drought subsides. Regional programs to counter boll weevil are expected to lessen some
of the impact however, responsibility for weevil elimination falls upon the producers who must
purchase and apply pesticides. Consequently small producers tend to bear the brunt of the losses, as
most do not have the resources available for multiple sprayings of insecticide creating hotspots of
weevil infestation. Contacts indicate that as a result of uneven pesticide application between different
producers in the affected region, cotton weevil will continue to be a problem for the foreseeable future
as no comprehensive weevil elimination program is in place. Government sponsored anti-weevil
programs includes the use of pheromone traps, and research on weevil resistant cotton varieties.
In MY 2012/13 approximately 80 percent of planted area is expected to be planted in narrow rows
(0.25m-0.35m). In the next few years producers are expected to continue replacing conventionally
plated cotton with no-till narrow row cotton as returns are higher. Due in part to the prevalence of
narrow row cotton, most cotton is now harvested with strippers as opposed to pickers, increasing foreign
content matter in lint. Consequently many ginners have had to modernize or adapt their gins to deal
with this problem.
Genetically modified organism (GMO) seeds dominate cotton production in Argentina, accounting for
an estimated 98% of planted area. The dominant seed variety is Upland BT Roundup Ready double
stack, accounting for the vast majority of GMO cotton. Sources have confirmed that glyphosate
resistance is starting to become a problem in the cotton producing region of Argentina, opening up
possibilities of growth for the use of other GMO seeds in the future. In MY2011/12 approximately half
of all cotton planted was no till, with the proportion of users expected to grow in the future.
Domestic Argentine cotton consumption for MY2012/13 is forecast at 551,155 B, a drop from 634,014
B consumed in each of the previous marketing years. Some sources believe that consumption could be
even lower as a result of lower expected internal demand. Domestic consumption continues to be
dominated by nine firms who account for 80 percent of consumption. Major consumers are; Alpargatas,
Tavex, Tipoití, TN & platex, Avellaneda, Lartex, Tecotex, Alg del valle, Enod. Consumption of
artificial fibers is expected to rise in MY 2012/13, but cotton continues to be the dominate fiber in the
Argentine textile industry.
There are approximately 110 cotton ginners located in Argentina, of which 72 were in production as of
2011. However capacity, left over from the booming days of cotton production in the 1990’s remains
and most operating gins are operating well below capacity. Some estimates have total capacity at 7.4
million bales of raw cotton (two-thirds last year’s cotton lint consumption). Argentina does not produce
cotton ginning equipment, the U.S. being the main supplier followed by Greece and Brazil. High cotton
prices during MY2010/11 lead many ginners to modernize their equipment, primarily purchasing gins
from the U.S. that are better able to deal with the higher foreign content matter of narrow row cotton. In
MY2012/13, Argentina is not expected to import any U.S. ginning equipment, as ginning capacity far
exceeds expected demand.
In MY2012/13 Argentina is expected to export 413,366 B of cotton. This represents a 10 percent drop
in exports from MY2011/12 which is estimated at 459,296 B of exports. Primary export markets are;
Brazil, Taiwan, and China, accounting for 55 percent of all exports in MY2010/11. In the past, Brazil
was the largest country of export due to inter business exports; although recently though this has
changed with Taiwan being the main recipient of Argentine cotton exports.
Export taxes within Argentina continue to favor the export of value added products. Pre-ginned cotton
has a 10 percent tax rate, compared to a 5 percent rate on lint cotton of all grades. Consequently all
cotton exports, including those within the MERCOSUR region, are in the form of ginned cotton or
Cotton exports continue to be limited in size by exporting infrastructure. According to sources, exports
are limited to 4,600 B of cotton a month due to lack of shipping facilities in the port of Buenos Aires,
the main cotton exporting port. Given current facilities, Argentine cotton would not be able to
appreciably increase the size of their export market without investment in exporting infrastructure.
Cotton exports are further hampered by the logistics associated with transporting lint from production
site to exporting ports.
All data for past year’s exports and imports are cited from the Global Trade Atlas (GTA). GTA’s
numbers concerning cotton exports and imports are calculated by statistics generated by the Argentine
National Institute of Census and Statics (INDEC). The presented statistics reflect closely what post
contacts have estimated, and in general, can be surmised to be reliable. It is important to note that the
statistics presented by INDEC report by calendar year, while USDA reports by a marketing year July-
August. Current year and out year data are based on estimations from industry sources.
Argentina is expected to import 46,000 B of cotton lint in MY2012/13, while lint imports for
MY2011/12 are set to reach 68,894 B. Imports for MY2012/13 could rise to make up for any shortfall
that might occur as a result of lower production. The primary source of imports is neighboring Brazil,
accounting for 100 percent of all imports in MY 2011/12. As a consequence of lower quality
production due to the drought the majority of imports coming in from Brazil in MY2011/12 will be of
higher quality cotton.
Argentina is not expected to import any cotton from the U.S. in MY2012/13. This is due to the fact that
Brazilian cotton is more competitive. Brazilian cotton has two distinct advantages over American
cotton; first that it faces lower shipping costs due to its proximity, second that inter MERCOSUR cotton
imports are duty free compared to the U.S.’s, at 6 percent.
Harvesting of cotton in Argentina runs from March-July causing very little of the harvested production
to be consumed in the same marketing year (July-August) as the production year. As a result the
country shows very high levels of carryover relative to its production and consumption. In MY2011/12
the beginning stocks were significantly higher than normal (367,437 B), due to producers unwillingness
to part with stocks due to price decreases.