Forecast for better cotton harvest refrains purchasers

19 Apr '11

2 min read

After hitting all-time highs of CEPEA - Center for Advanced Studies on Applied Economics, data in mid-March, the CEPEA/ESALQ Index for cotton type 41-4 (delivered in São Paulo city, payment in 8 days) has registered consecutive drops.

Between March 31 to April 15, the CEPEA/ESALQ Index for cotton type 41-4 (delivered in São Paulo city, payment in 8 days) moved down 8.96%, to close at 3.5326 reais or 2.2386 dollars per pound on April 15.

High cotton prices have been pushing down the demand; on top of that, data from Conab (National Company for Food Supply) released in early April, forecast that the cotton production of the 2010/11 season might increase by a whopping 70%. This scenario refrained purchasers even more.

According to data from Conab, the planted area of the 2010/11 season may total 1.361 million hectares, 62.9% more than in the previous season. The yield should reach 1,489 kilos per hectare, moving up 4.2% in relation to the previous crop. As a result, the production may amount 2 million tons (+69.8%). According to data from USDA, in the United States, the cotton planted area may move up 15% compared to the 2010/11 crop, reaching 5.1 million hectares.

However, according to data from BBM (Brazilian Commodity Exchange) 49% of the 2010/11 season has already been traded in advance, or even exchanged for inputs.

Cotton of the new crop, which starts to be harvested in late April, should reach the market more significantly from July onwards.

CEPEA - Center for Advanced Studies on Applied Economics

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