Oil, the dollar and freight rates redraw the cotton trade map in Turkey and Egypt

Higher crude oil prices, a firm dollar and rising ocean freight rates are reshaping the competitive balance in the eastern Mediterranean cotton trade, changing the terms on which Turkish and Egyptian spinning mills choose between Brazilian, Greek and other origins, Thessalia TV reports.

Oil works in both directions

The rise in oil creates a mixed picture for cotton. On one side it makes transport and production more expensive. On the other it strengthens cotton's relative competitiveness against synthetic fibres, above all polyester, which is tied directly to the petrochemical chain. Polyester remains a significant competitor to cotton, while international cotton prices continue to be driven by production levels, stocks and demand.

Brazil's share against the cost of distance

For mills in Turkey and Egypt the calculation no longer stops at the FOB price. Brazil has become the leading exporter, with more than 30% of world trade, and Turkey is turning increasingly to Brazilian origin on price. In 2024 Brazil exported roughly 249,000 tonnes of ginned cotton to Turkey, against 106,600 tonnes supplied by Greece.

Geopolitical instability, however, is pushing sea freight costs higher and eroding part of that Brazilian advantage. The greater the distance and the transit time, the heavier the impact of freight, insurance and financing on the final price the mill pays. Greek cotton holds the opposite advantage: geographic proximity and faster delivery.

Egypt, the euro-dollar rate and delivery time

The effect is particularly visible in Egypt. Greek cotton is attractive to Egyptian mills because it is competitive on price and can be delivered promptly, limiting currency and financing costs. At the same time Brazil has substantially strengthened its position in the Egyptian market.

Currency adds another layer. Cotton is priced internationally in dollars. On 15 September the euro stood at 1.1539 dollars. A stronger dollar raises the cost for European buyers, while movements in the Brazilian real feed directly into Brazil's competitiveness.

India as producer, consumer and buyer

The USDA forecasts Indian output rising to 25.2 million bales in 2026/27, alongside higher consumption by Indian mills. India therefore operates simultaneously as a large producer, a large consumer and a potential buyer, shaping global flows and stock levels. For Greek ginned cotton, the obstacle to selling into India, itself a major importer, is the increase in freight rates following developments in the Red Sea and the renewed activity of the Houthis.

For Greek and Brazilian cotton alike, the decisive figure is no longer only the exchange-quoted price of the fibre but the final delivered price at the mill gate, which combines:

• the price of the cotton itself;
• the exchange rate at which the trade is settled;
• the freight rate on the route;
• insurance costs;
• delivery time.

On that basis, origins that look cheaper at FOB are not automatically cheaper on arrival, and the ranking of suppliers into Turkey and Egypt can shift with oil, the dollar and the security situation on the shipping lanes rather than with the harvest alone.