Brazilian cotton prices drop due to lower quality in Jan –
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Brazilian cotton prices drop due to lower quality in Jan

2019-02-11 10:55:02 Fiber2Fashion

Cotton prices in the Brazilian market dropped last month as most of the cotton traded was of lower quality, according to Center for Advanced Studies on Applied Economics (CEPEA). Between December 28 and January 31, the CEPEA/ESALQ cotton Index, with payment in 8 days, dropped 4.03 per cent, closing at 2.9422 BRL per pound on January 31, 2019.

The price average in January, at 2.9625 BRL per pound, was 2.08 per cent lower than that from December 2018, the latest report from CEPEA said.

The trading pace was slow during the month as buyers had difficulties in closing new deals because there was a single bidding price for different types of cotton in the batches supplied.

As the exports pace has been firm this season (shipments may have surpassed 120,000 tons in January, according to Secex), higher quality cotton ended up sold to the international market.

Meanwhile, in Mato Grosso, the main cotton-producing state in Brazil, Imea (Mato Gross institute of agricultural economics) estimates the area to be sown with cotton in the 2018-19 crop to total 937,800 hectares. Around 72.42 per cent of the area had been sown until January 25.

According to data from the BBM (Brazilian Commodity Exchange) tabulated by CEPEA, 64.8 per cent of the 2017-18 Brazilian crop, estimated at 2.005 million tons, might have been traded until January 29. Of this total, 57 per cent was allocated to the domestic market, 31.2 per cent to the international market, and 11.8 per cent to flex contracts (exports with an option to sell in the Brazilian market).

For the next season, data indicates that at least 23.5 per cent of the 2018-19 output (forecast at 2.363 million tons by Conab) has been traded, with 48.2 per cent of the total allocated to the domestic market, 24.9 per cent to exports, and 26.8 per cent to flex contracts.