In late October, producers were still firm, but dealers and traders were operating more and flexible in regard of prices – it is worth noting that stocks of these players were low.
Agents from the industry, in turn, expect quotes to continue to drop, and, therefore, they were out of the market and still processing the product in stocks. The recent dollar valuation, however, may hinder the pressure from purchasers, given that it may lead trading companies to be even firmer regarding values.
Due to recent decreases, domestic prices have been nearing the import parity, which reduces purchasers’ interest in Brazil. At the same time, at the end of the month, domestic prices were getting further of export parity, which, in turn, attracts sellers to trade in the domestic market.
The CEPEA/ESALQ Index for cotton type 41-4 dropped 2.14% in October, closing at 2.0899 reais (0.9367 dollar) per pound on Oct. 31.
As for the new crop, cotton growers are wrapping up planning activities. In Paraná, São Paulo and southern region of Mato Grosso do Sul, activities have already started.
In part of the Cerrado in Brazil, producers are anticipating the soybean planting, focusing on the cotton planting in the second crop. In general, the soybean planting is more advanced compared to previous years, which may favor the second cotton crop planting, in case weather conditions continue favorable.
Center for Advanced Studies on Applied Economics (CEPEA)
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