Cotton prices in Brazil face volatility in October

09 Nov '23

2 min read

Pic: Adobe Stock

Insights

In October, Brazil's cotton market saw fluctuations as buyers and sellers disagreed on prices.
Purchasers pressed for lower rates, resulting in limited trades, mainly for inventory replenishment.
Some sellers held firm on high-quality cotton prices.
Market liquidity decreased, with logistical challenges. Cotton processing reached 74 per cent nationally.

Cotton prices experienced fluctuations in the Brazilian spot market this October. The market saw a divergence between the quality of cotton and the prices demanded by buyers and sellers. Purchasers exerted pressure on quotations by holding firm on their price expectations, while sellers sought higher values, resulting in moments of stability, according to a report from the Center for Advanced Studies on Applied Economics (CEPEA).

Despite a keen interest in new transactions, purchasers remained inclined to offer lower values. Consequently, only a limited number of trades were concluded in October, primarily aimed at replenishing inventories or for immediate consumption. Notably, some sellers stood resolute on their price demands, particularly for high-quality cotton, CEPEA said in its latest fortnightly report on the Brazilian cotton market.

October witnessed lower overall market liquidity, with industry participants reporting logistical challenges, including high freight costs and difficulties in securing transportation.

According to Brazilian Association of Cotton Growers (Abrapa), cotton processing in Brazil reached 74 per cent of the national production by October 26. In the state of Mato Grosso, processing reached 68 per cent, while in Bahia, it surged to 90 per cent.

Between September 29 and October 31, the CEPEA/ESALQ Index for cotton registered a 1.36 per cent decrease, closing at BRL 4.0185 per pound on October 30.

The Cotton Outlook report, released on October 27, projects global cotton production for 2023-24 at 24.603 million tons, a 4.85 per cent decrease from the previous year (2022-23 - 25.857 million tons), with a slight reduction of 0.38 per cent compared to the previous month's forecast. In Brazil, cotton production for 2023-24 is estimated at 3.05 million tons, representing a 3.8 per cent decline from the previous year's figure of 3.17 million tons.

Fibre2Fashion News Desk (KD)

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