Much has been written about China's dominance of the world cotton market. It's almost reached the point that when a textile mill buyer in Shanghai sneezes, a U.S. cotton merchant develops pneumonia.

But one U.S. market watcher believes China's days as a major cotton production force are numbered. The country U.S. cotton producers will have to contend with for an increasing share of the world market: Brazil.

Speaking at the American Cotton Producers meeting in New Orleans, William B. Dunavant III said Brazil is set to become one of the United States' toughest competitors in the cotton market as China's population growth forces its leaders to switch more acres out of cotton.

“China is losing an estimated 2 percent of its agricultural acreage per year due to urban sprawl and industrial development,” he said. “With estimates for increased population growth, food production will continue to be more important than fiber production.”

If China's cotton production continues to fall short of supplying its mills — as Dunavant expects — other countries will expand production to fill that gap. Brazil is more than ready to meet that challenge.

“Farming in Brazil, today, is not a cultural issue; it is a business issue,” he noted. “The Brazilian producer's practices are similar to ours, the way they manage their farms are equal, and in some cases better than ours.”

Brazilian producers have copied U.S. models of producing, researching, picking, ginning and other uses of technology along with some from other progressive cotton-producing countries such as Australia and Turkey. “The results are ‘extraordinary,’ and in the last five years they have created one of the greatest expansion areas,” he noted.

The Brazilian grower's base quality is strict low middling, 1-3/32 inches and their yields range between 1,400 and 1,450 pounds per acre. Their average cost of production runs between $475 and $500 per acre or about 35 cents per pound — before rent or depreciation costs.

“With the potential to reduce costs by farming larger areas of, say 100,000 acres, we and other major producing countries can expect very strong competition from Brazil,” said Dunavant. “Cotton acreage in this part of the world can double even before 2010.” He says Brazil could increase production from 5 million bales to 9.5 million bales by 2010 and exports from 1.5 million to 6 million bales.

Brazil will have to solve major problems with its transportation structure to be able to move that much cotton and the increased amounts of soybeans it's producing, a tall order for any country. It also is not likely to expand its textile industry, meaning most of those bales must be exported.

“I do not see them increasing their domestic consumption of 3.6 million bales of cotton as dramatically as I see them increasing their cotton production,” he said. “Basically, this is because of the great investment required to compete internationally and the cheap labor costs of China and on a lesser scale, India.

e-mail: flaws@primediabusiness.com