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Brazil: Cotton prices reach highest level since April 2011
17
May '18
Brazil: Cotton prices reach highest level since April 2011
Boosted by low supply, cotton prices continued to rise in the Brazilian market in the first fortnight of May 2018. Between April 30 and May 15, the Center for Advanced Studies on Applied Economics (CEPEA)/ESALQ cotton Index rose 7.1 per cent, closing at 3.5758 BRL ($0.9764) on May 15—the highest daily price, in nominal terms, since April 14, 2011 (3.6246 BRL).
 
During the fortnight, sellers made only a few batches available in the spot market, asking higher prices than bids, which hampered trades. Sellers were not flexible regarding prices because of the good trading pace for the 2016-17 season (mainly exports), drop in the value of Brazilian currency in the last two months (which disfavours imports) and uncertainties regarding the entry of the new crop in the spot market, which will depend on the end of the crops cycle, CEPEA said in its latest fortnightly report on the Brazilian cotton market.
 
Many buyers, on the other hand, bought small volumes to meet urgent demands. Others were out of the market, working with the cotton previously purchased and/or decreasing production. Cotton processors are having difficulty in passing on cotton price rises to by-products and are expecting price drops as the new crop harvesting advances.
 
According to Cepea surveys, some trades involving the cotton from the 2017-18 season have been closed, but, in general, agents are focused on the 2017-18 crop development.
 
Conab (National Company for Food Supply) estimates Brazil’s 2017-18 cotton output to total 1.942 million tons, up 4.3 per cent compared to the crop estimated in April 2018 and 27 per cent larger than the 2016-17 crop. The projected 1.942 million tons of cotton output would be the highest since 2011-12.
 
Area under cotton cultivation is forecast at 1.175 million hectares (+25.2 per cent compared to the 2016-17 season), and productivity, at 1,652 kilos per hectare (+1.4 per cent).
 
Meanwhile, Brazilian cotton shipments decreased for the sixth consecutive month in April. From March to April, exports decreased by 39.3 per cent, and compared to April 2017, shipments were 7.3 per cent lower at 28,600 tons. Imports totalled 1,533 tons in April 2018, the largest volume since July 2017, up 11.3 per cent compared to March 2018, but down 68.2 per cent compared to April 2017. (RKS)
 

Fibre2Fashion News Desk – India


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