Brazilian cotton prices fall as domestic supply increases

Influenced by increase in supply in the spot market and devaluations abroad, cotton prices fell in the Brazilian market in the first fortnight of September. The CEPEA/ESALQ Index for cotton closed at 5.2685 BRL/pound on September 15, 1.6 per cent down in the fortnight. The average price of 5.3373 BRL/pound, was 4.5 per cent higher than first half of August.

“Still, liquidity was not high in the first fortnight of September, which may be linked to the dollar fluctuation in that period,” the Center for Advanced Studies on Applied Economics (CEPEA) said in its latest fortnightly report on the Brazilian cotton market.

“Purchasers were putting pressure on values, claiming difficulties to pass on to by-products the current high production costs. Some sellers agreed to lower asking prices, while others did not, focusing on cotton processing,” the report added.

Meanwhile, data released by Conab (Brazil’s National Company for Food Supply) on September 9 estimated the Brazilian cotton area at 1.37 million hectares in the 2020-21 season, 0.4 per cent larger than that previously reported, but 17.7 per cent smaller than that in the 2019-20 season. Productivity and production estimates were revised up too compared to that previously reported, by 0.33 per cent and 0.72 per cent, respectively, to 1,720 kg/hectare (4.6 per cent down from that last season) and 2.357 million tons (21.5 per cent down from that last season).

Domestic consumption continued forecast at 715,000 tons, and exports in 2021, at 2.1 million tons, 19.2 per cent up and 1.2 per cent down from that in the 2019-20 season. Ending stocks are predicted at 1.31 million tons, 1.3 per cent up from that reported in August, but still 25.9 per cent down from that last season.

In August, Brazil’s cotton exports stood at 50,800 tons, 17.3 per cent less than that in July 2021 and 53.13 per cent down compared to August 2020, according to data from Secex, the country’s Foreign Trade Secretariat. This is the lowest monthly volume exported since August 2019.

Last month, the major destinations for the Brazilian cotton were Vietnam (20 per cent), Pakistan (20 per cent), Bangladesh (per cent), Indonesia (per cent), Turkey (per cent) and China (per cent).

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