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Brazilian cotton exports to zoom 42.4%
05
Jan '12
In early 2011, sellers were optimistic regarding cotton prices and, in March, quotes hit record levels in both domestic and international markets. This led to an increase in the planted area and global supply moved up. The demand, however, has not followed the same pace. Cotton was traded at record values, so, purchasers were looking for cheaper alternatives.

Consequently, the demand for artificial fibers has grown, reducing the demand for cotton yarn. Cotton quotes shrank, but purchases of natural fibers, such as cotton, did not increase quickly as expected.

In the first three months of 2011, values in both the domestic and international markets upped, hitting a record in March, despite the low liquidity. In that time, agents wondered what limit quotes would hit.

Prices moved up sharply until mid-March due to an increase in consumption, to a reduction in the planted area in important producing countries in the 2009/10 season and to the shrinking of world stocks.

In the second fortnight of March, quotes were high and led purchasers to refrain from trading, which pushed down prices in the domestic market.

In April, values dropped by a whopping 24.35%, the highest negative variation in a month of all Center for Advanced Studies on Applied Economics - CEPEA data, started in July 1996.

Expectations of a higher world supply pushed down cotton prices until mid-2011, when weather problems in many regions in the world, including Brazil, caused uncertainties about the world production. Meanwhile, the demand became steadier.

At the beginning of the second semester of 2011, the trend of cotton quotes changed three times in a little more than a month. In the last three months of the year, the low demand for cotton prevailed in Brazil and in the world, pressing quotes down.

In the 2010/11 season, the planted area in Brazil upped 67.6%, to 1.4 million hectares, according to National Company for Food Supply. The yield moved up 2%, to 1,400 kilos per hectare. Therefore, Brazilian cotton production increased 64%, amounting 1.96 million tons in the 2010/11 crop.

Brazilian shipments may amount to 730,000 tons, representing an increase of 42.4% compared to exports in 2010.

Center for Advanced Studies on Applied Economics

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