CEPEA - Center for Advanced Studies on Applied Economics reports that most cotton players were refrained from trading in late February due to the carnival holiday (Feb. 18-22). Those who were operating were prudent and preferred to close deals after carnaval. In the international market, significant variations of contracts at New York Board of Trade (ICE Futures), especially for March 2012 due date, also refrained players.
The Brazilian industry, in general terms, tried to press quotes down, due to price differences with the export parity, signaling that they have the product stocked up and want to wait for new price drops to resume trading. In some cases, companies are still receiving cotton purchased at higher prices and might resume trading only in May.
Sellers, in some cases, were more flexible regarding quotes due to the small number of purchasers operating in the market. On balance, the supply of low-quality cotton still prevails.
The CEPEA/ESALQ Index for cotton type 41-4 (delivered in São Paulo city, payment in 8 days) dropped 6.25% in the accumulated of the month (between Jan. 31 and Feb. 29), and closed at 1.6289 real or 0.9492 dollar per pound on Feb. 29.
In late February, Brazilian producers focused on the wrapping up of the cotton planting activities in the Cerrado region and on the soybean harvesting activities.
CEPEA - Center for Advanced Studies on Applied Economics
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