Brazilian cotton prices keep low between April 1-15
19 Apr '12
2 min read
Cotton prices kept the downward trend in the Brazilian market in early April. The CEPEA/ESALQ Index for cotton type 41-4 (delivered in São Paulo city, payment in 8 days) fell 2.11% in the first fortnight of April and closed at 1.5894 real or 0.8633 dollar per pound on April 16.
Only a few purchasers were interested in closing new trades in early April, while others preferred to only observe the market behavior. Moreover, the supply of cotton type 41-4 remained limited and most sellers asked for higher prices compared to what has been practiced until now. This scenario has pushed liquidity down.
On the other hand, producers remained willing to sell low quality batches, but kept firm regarding prices. Agents surveyed by Cepea say that most cotton growers were selling mixed batches (high and low quality product) and they were more flexible regarding quotes; however, purchasers seem to be unsatisfied.
In the south of Mato Grosso do Sul state, where the harvesting is very advanced, production may be 10% lower than initial forecast, according to agents surveyed by Cepea, because of the dry weather during the cotton developmental stage.
In the north region of Minas Gerais and in Bahia, where the dry weather has also prevailed, rains resumed falling, but not enough to recover crops. Consequently, losses are likely to happen.
Data from Conab released on April 10 indicate that the planted area in Brazil in the 2011/12 crop may total 1.39 million hectares, only 0.2% smaller in relation to the previous year – these data is different from the initial forecasts, which indicated an area increase.
The Brazilian production may amount 2 million tons, 2.1% more than the 2010/11 season. For the first time, the total of the domestic demand and the volume forecast to export will be equal to 930,000 tons.