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Brazilian cotton prices shoot-up 34% in 2013
07
Jan '14
Cotton prices soared in 2013. This scenario is a result of the decrease of the planted area and the return of domestic demand and exports. In four months alone (May, June, September and November) quotes moved down, considering monthly averages. For the whole of 2013, however, prices upped 33.8%.

Due to the indication of lower profitability of cotton compared to other area competing crops in 2012, producers reduced the planting. However, in 2013, the domestic demand increased and exports of the product harvested in 2012 still registered a good performance, leading domestic surplus to decrease.

Between June 2012 and April 2013, the volume shipped surpassed one million tons, considering the accumulated in 12 months (the reference month and the 11 previous). However, as months went by, domestic prices increased more than those in the international market. Therefore, quotes in Brazil operated close to the import parity.

In the first quarter of the year, producers were focused on the harvesting and the soybean trading and remained firm in regard of high-quality cotton prices. Exports in previous months reduced the domestic availability, at the same time that companies needed to rebuild stocks. Unfavorable weather conditions in some regions concerned cotton growers in regard of the volume produced and the quality in the 2012/13 crop.

At the end of 2013, the pace of trades was very sluggish. The industry was purchasing only the necessary amount to continue activities. Uncertainties regarding cotton prices in the upcoming year led players to be even more refrained.

Center for Advanced Studies on Applied Economics (CEPEA)

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