As 2026 begins, Brazil’s agricultural sector is facing a starkly contradictory scenario as domestic cotton prices have plummeted to their lowest levels since 2009. This sharp decline is the result of a "perfect storm": a massive national surplus following a record-breaking harvest coupled with sluggish demand from the domestic manufacturing industry. While international export volumes—particularly to Asian markets—remain robust, the sheer volume of supply flooding the local market has created a price suppression not seen in 16 years.
This market environment presents a severe challenge for cotton farmers, who are now grappling with thinning profit margins while operational costs remain high. The abundance of supply in national warehouses has significantly weakened the bargaining power of producers. Conversely, this phenomenon has provided a major windfall for Brazil’s downstream textile industry. Local textile mills are currently enjoying historically cheap raw materials, which has directly boosted their profit margins and provided a competitive edge in the global apparel market.
According to analysts from the Brazilian Cotton Producers Association (ABRAPA), this situation reflects a complex market dynamic where production success does not always translate into farmer prosperity if not met with strong domestic industrial absorption. "We are seeing a significant imbalance between our extraordinary production capacity and a domestic demand that remains dampened by global economic conditions," noted a commodity sector observer in São Paulo. "While textile plants are benefiting from low input costs, the long-term sustainability of the upstream sector is a major concern; we must ensure farmers do not abandon cotton for other crops."
On the other hand, textile industry leaders are welcoming the price drop as a strategic momentum to expand production and increase their share in the export market. With lower input costs, Brazilian-made garments are now more competitive than products from rival nations that rely heavily on imported cotton subject to volatile international prices. This period of record-low prices is expected to act as a catalyst for the modernization of textile machinery across Brazil as mills seek to increase the added value of their final products. Through the first quarter of 2026, the market is expected to remain at these low levels until national stocks are fully absorbed or policy interventions are introduced to rebalance the market.
