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Cotton trade weakens in Brazilian market in June

06 Jul '17
2 min read

With the slow pace of the 2016-17 harvesting, cotton trades were weakened in the Brazilian market in June. Processors purchased some batches early in the month, but most of them were retracted, waiting for the harvesting to advance, according to the latest fortnightly report by Sao Paulo based the Center for Advanced Studies on Applied Economics (Cepea).

The few traded batches during the month involved small volumes from both the 2015-16 and the 2016-17 crops, Cepea said in its report.

During the month, demand for cotton remained low in the Brazilian market, pressing down quotes. The CEPEA/ESALQ Index, 8-day payment terms, for cotton type 41-4, delivered in São Paulo, dropped 4.24 per cent in June, closing at 2.6607 BRL per pound on June 30. Sellers were more flexible regarding asking prices, since processors were not pleased with the quality of the available batches, which varied according to cotton supplied (2015-16 or 2016-17 crop).

Most purchasers and sellers were focused on contracts with delivery scheduled from August onward. However, the gap between bidding and asking prices limited new trades.

According to Cepea collaborators, the harvesting of the 2016-17 crop advanced in São Paulo, Bahia, Minas Gerais and Goiás. In Mato Grosso, activities started, but were forecast to step up in July.

Despite the limited availability from the 2015-16 crop in the Brazilian market, the sharp drop of international prices pressed down the exportation parity, in spite of the dollar valuation against the Brazilian real. In the given scenario, trades of export contracts were slow, even for the 2017-18 crop. (RKS)

Fibre2Fashion News Desk – India

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