Brazil cotton output seen higher

Cotton competes for land with soy and corn in Brazil's main summer crop, and persistently high prices for the grains could mean less available area for production of the lint.

"Brazil could reduce the planted area by up to 5 percent but, if rains are normal, I would say the crop would likely be a record one again," said Anea's president, Marcelo Escorel.

In the current 2010-11 season, cotton production reached an unprecedented area, due mainly to attractive prices that hit record levels above US$2 per lb earlier this year.

New York futures prices are above US$1, still at a historically attractive level for producers and more than offsetting higher costs of production in Brazil.

High profitability last year led producers to plant cotton even in less-productive areas and outside the most favourable weather periods.

"Producers will plant (only) where they harvested high yields, so the area will be a little bit lower, but not too much because the price is still attractive," Escorel said.

Copyright Reuters, 2011