China-Brazil cotton trade could be settled in yuan in future: industry representative
Published: Jun 16, 2023 09:42 PM
A cotton picker is at work in Xayar County, northwest China's Xinjiang Uygur Autonomous Region, Nov 10, 2022. Photo:Xinhua

A cotton picker is at work in Xayar County, northwest China's Xinjiang Uygur Autonomous Region, Nov 10, 2022. Photo:Xinhua

The export volume of Brazilian cotton to China is expected to overtake that of the US in the next few years, and the trading of the bulk commodity could be settled in yuan as "a way to the future," Marcelo Duarte Monteiro, director of International Relations at the Brazilian Cotton Growers Association, told the Global Times on Friday.

In recent years, Brazilian cotton has been gaining a "higher and higher share" in the Chinese market thanks to its quality, Marcelo said. He made the comment on the sideline of the 2023 China International Cotton Conference, which kicked off on Thursday in Guilin, South China's Guangxi Zhuang Autonomous Region.

Currently, Brazilian cotton makes up 30 percent of China's total cotton imports, compared with less than 10 percent five years ago. 

Marcelo opined that Brazil is "certainly" set to be "the leader of cotton exports" to China in a few years as a result of several factors. 

Brazil has a lot of space to increase production and the country is also making efforts to elevate yields per hectare. Furthermore, the country has fewer weather issues compared with the rest of the world. 

According to Marcelo, China is a world-leading cotton manufacturer, with an annual consumption of more than 8 million tons of cotton. China produced more than 6 million tons of cotton every year, and relies on imports to cover the remaining gap.

In the first four months, China imported 382,000 tons of cotton, according to data released by customs authorities. Of this, the share of US cotton was 52.22 percent, while Brazilian imports accounted for 31.53 percent. 

With regards to yuan settlement, Marcelo said that cotton trade between China and Brazil has yet to be settled in the Chinese currency, but "it's a matter of time" and "could happen in the future."

In April, Brazilian President Luiz Inacio Lula da Silva said he supported creating a currency for trading between BRICS countries (Brazil, Russia, India, China and South Africa). In March, China and Brazil reportedly reached a deal to trade in their own currencies, ditching the US dollar as an intermediary.

China is Brazil's largest trading partner and the main market for various Brazilian agricultural products including soybean and cotton. In April, Lula da Silva visited China and was accompanied by a delegation of over 200 business representatives, including 90 from the agricultural sector.