Cotton trades in Brazil affected with reduced supply

17 Jun '17

2 min read

Liquidity was low in the Brazilian cotton market in the first fortnight of June 2017 due to reduced supply in the spot market. Despite the interest in new acquisitions, some processors did not show interest in purchasing for quick-delivery in light of the low quality of the available batches, according to fortnightly report on cotton from CEPEA, Brazil.

The report by the Centre for Advanced Studies on Applied Economics (CEPEA) said that purchasers need to buy small volumes only to replenish inventories and/or to accomplish contracts.

With the beginning of the 2016/17 harvesting, cotton from the 2015/16 crop continued concentrated with a few agents, who kept firm regarding asking prices, despite the reduced quality.

In this context, cotton prices oscillated in the market in that period. From May 31 to June 14, the CEPEA/ESALQ Index, 8-day payment terms, for cotton type 41-4, delivered in São Paulo, increased a slight 0.45 per cent, closing at 2.7910 BRL per pound on June 14. Agents were focused on trades involving the 2016/17 crop, mainly for shipment in the coming months and deliveries in Brazil.

According to data released by Conab on June 8, the Brazilian cotton production in the 2016/17 crop may increase by 15.4 per cent, totaling 1.488 million tonnes. The boost is due to expectations for a sharp increase at 17.4 per cent in productivity (1,585 kilogram per hectare), since the estimated area is 1.7 per cent smaller compared to the 2015/16 crop. (SV)

Fibre2Fashion News Desk – India

More Textiles News - Brazil...