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Brazilian cotton price index returns to April 2018 level

18
Aug '18
Brazilian cotton price index returns to April 2018 level
Cotton prices dropped in Brazil in the first fortnight of August as sellers became more active in the spot market. From July 31 to August 15, the Center for Advanced Studies on Applied Economics (CEPEA)/ESALQ cotton Index, with payment in 8 days, decreased 2.5 per cent, closing at 3.2462 BRL per pound on August 15; returning to the level seen in April 2018.

Sellers were willing to lower asking prices as the 2017-18 harvesting advanced and the cotton purchased through contracts was delivered. Purchasers were attentive to this scenario, and in view of estimates of a larger output in Brazil in six years, they pressed down quotes for quick-delivery acquisitions, CEPEA said in its fortnightly report on the Brazilian cotton market.

Since most of the 2017-18 crop is already sold, the batches made available by cotton growers are usually of low quality. In general, currently farmers are focused on harvesting and processing of cotton. Meanwhile, trading companies were focused on the delivery of the product and were away from the spot market in the first half of the month.

Both processors and traders were only looking for cotton to meet demands for the short-term, expecting prices to decrease more sharply in view of the expected larger crop. Most agents were focused on the exports of the cotton purchased through contracts, as shipments are slow due to the harvesting delay, according to CEPEA collaborators.

According to data released by CONAB, the National Company for Food Supply, on August 9, Brazil’s 2017-18 cotton production may reach 1.98 million tons, 29.4 per cent up compared to the previous season and 0.7 per cent larger than that forecast in July 2018. That is due to a 25.2 per cent increase in the area sown. The average productivity is likely to be 1,683 kilos per hectare, up 3.3 per cent. (RKS)

Fibre2Fashion News Desk – India


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