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Home / Knowledge / News / Textiles / Brazilian cotton prices start declining in late January
Brazilian cotton prices start declining in late January
05
Feb '18
After a sharp increase in cotton prices observed in the first three weeks of January, prices took a negative turn in later part of the month in the Brazilian market. Center for Advanced Studies on Applied Economics-Luiz de Queiroz College of Agriculture (CEPEA/ESALQ) cotton index rose 3.34 per cent in January to close at 2.7536 BRL per pound on January 31.
 
“When prices were on the rise, processors were more active in the market, in order to replenish inventories and adjusting bidding to asking prices. Cotton growers, in turn, were attentive to the price rises at the New York Stock Exchange (ICE Futures), the delivery of the product purchased through contracts and new contracts for exportation in 2018 and 2019. In the last week of January, however, with the international price drop, purchases ended up reducing bidding prices,” CEPEA said in its latest fortnightly report on the Brazilian cotton market.
 
Towards the end of the month, the pace of trades slowed down, and competition between agents and some buyers limited trades in the spot market. There were also reports of lower quality in several cotton batches. Some growers, who had already sold a great part of their output, went out of the market to focus on fieldwork.
 
For future shipment, the pace of trades was fast, both for the 2016-17 and the 2017-18 crops – some of them involved the 2018/19 season as well. Trades were based on fixed prices (flex), on contracts at ICE Futures and on the CEPEA/ESALQ Index. Despite the gap between bidding and asking prices for both seasons, some export deals were made.
 
Data from the BBM (Brazilian Commodity Exchange) tabulated by CEPEA indicate that 68.2 per cent of the 2016-17 Brazilian crop, estimated at 1.529 million tons, might have been traded until January 30. Of this total, 59.1 per cent were sold to the domestic market, and 40.9 per cent to the international market. For the next season, data indicate that at least 40.5 per cent of the 2017-18 production (forecast at 1.703 million tons) may have been traded in the same period, with 63.6 per cent allocated for exportation and 36.4 per cent for the domestic market.
 
In January, Cotlook A Index averaged 0.9128 BRL per pound, 7.24 per cent higher than in December 2017, while dollar dropped 2.52 per cent against real in the same period. (RKS)

Fibre2Fashion News Desk – India


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