In 2018/19, Brazil emerged to become the world's second largest cotton exporter, increasing exports from 2.8 million bales in 2008/09 to now 6.2 million bales.
As such, Brazil wields a significant influence on global cotton prices and further growth is predicted.
In a recent global report, Rabobank estimates cotton production in Brazil could rise by 40 per cent during the next decade, and exports could more than double.
We forecast Brazilian cotton output to rise to 18 million bales by 2028/29, on par with the US.
Brazil's expansion into a major global cotton producer is rightly considered a threat to the Australian industry.
Brazil's export season competes directly with ours and it also exports into similar markets, particularly China, a factor which could start to pressure local Australian cotton basis.
Brazilian cotton also enjoys a notably lower cost of production, with the lowest break-even price to produce cotton compared to other exporters. Some 95pc of Brazilian cotton production is rain-fed, with the majority planted as a second crop after soybeans.
In a recent global report, Rabobank estimates cotton production in Brazil could rise by 40 per cent over the next decade, and exports could more than double.
In addition, weakness in the Brazilian real (versus the US dollar) is another key advantage for its cotton exports.
While Brazil's cotton fibre quality is not yet at the same standard as Australia, it is improving rapidly.
For now, Brazil's influence has been somewhat muted as the US/China trade war, along with local drought, has meant Brazilian cotton has been able to replace bales others exporters - such as Australia - could not supply.
We anticipate Brazil to rise in terms of influence on both local and global markets. However, in order to do so, it must overcome several bottlenecks, in particular, infrastructure constraints.
Currently, 99pc of Brazilian cotton exports are moved through the Port of Santos, located some 2000 kilometres away from the key production regions. With export capacity almost exhausted, investment in new routes for cotton exports and the development of infrastructure within farms is critical for future growth.
In order to reach production growth and export potential for Brazilian cotton, investments need to take place mainly in greater ginning capacity, larger export capacity by developing new routes for bales to reach ports and much higher working capital for new cotton growers, compared with corn and soybean crops.
Even with infrastructure development though, the Brazilian model is still vulnerable to risk - particularly the weather.
The second-crop nature of cotton production, coupled with reliance on rainfall, means Brazilian output will remain vulnerable to Mother Nature. And any swings in Brazilian production will have considerable influence on the global balance sheet.