The higher demand has been pushing up sharply cotton quotes in the Brazilian market. In late July, the harvest and cotton ginning advanced at a slower pace than in previous years. The delivery of some contracts has not been accomplished, which reinforces the demand.
In the last week of July (between Jul. 25-29), the CEPEA/ESALQ Index for cotton type 41-4 (delivered in São Paulo city, payment in 8 days) increased by a whopping 12.03%. In the accumulated of July, however, it has decreased 5.56% and closed at 1.8107 real or 1.1659 dollar per pound on July 29.
Because of recent increases, prices in the domestic market are already more advantageous compared to the international quotes. However, they were nearing import parity, which might indicate a demand reduction.
In general terms, the market was moving up at a satisfactory pace in late July; however, refrained sellers have limited trades. Influenced by highs, and expecting that prices bounce back to 2 reais per pound, most cotton growers prefer to postpone trades.
CEPEA - Center for Advanced Studies on Applied Economics is a research center of the University of São Paulo located at ESALQ in Piracicaba, State of São Paulo. It is focused on agribusiness issues considering a diversity of related subjects: market analysis and price discovery, international trade, macroeconomics, management strategies, environmental and social aspects, entrepreneurship and family farming.
CEPEA - Center for Advanced Studies on Applied Economics
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