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Brazilian cotton prices rise 8% in Jan
08
Feb '14
Cotton quotes upped significantly 8% in January in the domestic market – this is the most sharp price fluctuation since March 2013. The increase is attributed to low stocks, firm demand and some refrained producers, who are focused on the planting of the new crop.
 
Increases of export and import parities, affected by international quotes and dollar, also favor cotton price rises in Brazil. In January, the average cotton price was 2.2248 reais per pound, 4.7% more than in December 2013 and 27.1% higher compared to that in January 2013, in nominal terms.
 
In the first days of January, the demand was heated, but, in the second fortnight of the month, the industry reduced the pace of purchases, both for immediate delivery and for anticipated contracts, which limited daily price adjustments.
 
Players from companies claimed difficulties to transfer cotton price rises for by-products. Moreover, part of demanders says that they are supplied for the short-term. This scenario, along with refrained trading companies due to oscillations in the international market, resulted in low liquidity at the end of the month.
 
Producers, in turn, are focused on the soybean harvesting and/or cotton planting. Players surveyed by Cepea say that the planting of the first cotton crop is finished in Mato Grosso, Goiás and Minas Gerais States.
 
As for the planting of the second season (cropped after the soybean harvesting), is advanced and might wrap up in February. In general terms, crops present a good development, but, in some farms in the northern region of Mato Grosso, the planting was halted for some days, due to heavy rains.
 
Considering the international market, the announcement of possible changes in the Chinese public stocks policy brought uncertainties for international prices. The measure resulted in decreases of the index for Cotlook A and at ICE Futures. 
 

CEPEA

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