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Cotton trade continues at slow pace in Brazil
23
Nov '13
Cotton trades were still moving at a slow pace in the Brazilian market in the first fortnight of November. In general terms, the current scenario does not indicate changes. In the second week of the month, the dollar valuation against real, which pushes up parities, and decreases of international prices led players to be careful. 
 
On November 18, on the other hand, dollar quotes closed at 2.268 reais, a significant decrease of 2.24% in relation to Nov. 14, which brings even more uncertainties – it is worth noting that dollar quotes hit 2.3350 reais on Nov. 11. Prices in Brazil, however, are still firm.
 
On one hand, the cotton supply in the 2012/13 season was low and sellers were refrained in early November. Producers were focused on the wrapping up of 2013/14 crop planning and the soybean planting. Only a few cotton growers were operating and offering batches at high prices.
 
Concerning purchasers, many of them have stocks and, therefore, they buy only under immediate needs. This pattern of behavior is seen since they are expecting price drops in Brazil, which is based on the possible supply increase in the USA. Many companies say that they do not have high-quality cotton.
 
Between October 31 and November 18, the CEPEA/ESALQ Index for cotton type 41-4 decreased only 0.09% and closed at 2.0881 real (0.9206 dollar) per pound on Nov. 18. 
In a report released on Nov 8, the USDA indicated that the world cotton production in the 2013/14 season may decrease 4.8%, to 25.5 million tons. The consumption, in turn, may increase 2.3%, to 23.9 million tons.
 
In Brazil, Conab (National Company for Food Supply) data released on November 8 indicated that the cotton production may total 1.63 million tons in the 2013/14 crop. The domestic consumption is estimated at 920 thousand tons and exports, at 540 thousand tons. Conab revised upwards exports forecasts for 2013, to 560 thousand tons, and reduced projections for 2014.
 
In October, cotton exports totaled 96.7 thousand tons, 18.5% more than in the month before, but 48.5% smaller in relation to October/12 – Secex (Foreign Trade Secretariat) data. The average price to export was 1.9110 real per pound, 4.7% below that in September and 2.8% higher compared to Oct/12.
 
In the partial of the year, Brazil shipped 472.1 thousand tons, 42.4% below the volume shipped in the same period of 2012. Considering the volume accumulated in 12 months, exports have totaled 705.4 thousand tons, the smallest since November 2011 (accumulated between Dec/10 and Nov/11).
 

Center for Advanced Studies on Applied Economics (CEPEA)


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