brazillian cotton
Cotton

Brazilian Cotton Prices down as Trading Pace Slows

Cotton quotes dropped in Brazil in the first fortnight of September due to slow trading pace in the spot market. However, the decline was not as much as seen in previous weeks. From August 31 to September 14, the CEPEA/ESALQ cotton Index, with payment in 8 days, decreased a slight 0.23 per cent, closing at 3.1822 BRL per pound on September 14.

“While purchasers were searching for high quality batches at lower prices, sellers were supplying heterogeneous batches, which increased the competition between agents,” Center for Advanced Studies on Applied Economics (CEPEA) said in its latest fortnightly report on the Brazilian cotton market.

A large volume has already been sold and, as harvesting and processing advance, cotton farmers focus on the deliveries, which, in some cases, are late. Besides, the recent dollar appreciation against real fastened the delivery pace and strengthened price fixing for contracts this month, the report added.

Meanwhile, data from IMEA (the Mato Grosso Institute for Agricultural Economics) indicate that, until September 14, harvesting of the 2017-18 crop in Mato Grosso, the largest cotton producing province in Brazil, had reached 99.47percent of the state area. This is above the last five years average of 93.38 per cent.

Conab (the National Company for Food Supply) has revised its estimate for the 2017-18 Brazilian crop upward by 2 million tons. Conab expects Brazil’s 2017-18 crop to be 31.1 per cent higher than the previous season, chiefly due to a 25.1 per cent increase in the area sown with cotton, which touched 1.17 million hectares. The average productivity is also projected 4.8 per cent higher than 2016-17 to 1,708 kilos per hectare in 2017-18.

In terms of international trade, cotton shipments from Brazil turned positive after dropping for nine consecutive months, according to Secex (the Secretariat of Foreign Trade). In August 2018, cotton exports were 21,400 tons, around three times of 8,700 tons exported in July 2018, but still 68.6 per cent lower than in August 2017.

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