Cotton Prices Show Upward Trend in Brazilian Market

Cotton prices showed upward momentum in the Brazilian market in the first half of March, as sellers were unwilling to lower their asking prices. Between February 28 and March 15, the Center for Advanced Studies on Applied Economics/Luiz de Queiroz College of Agriculture (CEPEA/ESALQ) cotton Index rose 5.9 per cent, ending at 3.0091 BRL per pound on March 15.

Owing to stiff stance taken by sellers, “purchasers who needed cotton for prompt-delivery had to increase bidding prices in order to close trades. Some other processors, in turn, were cautious regarding purchases of new batches in the spot market, claiming difficulty to pass on the price rises of cotton to the by-products,” CEPEA said in its latest fortnightly report on Brazilian cotton market.

Meanwhile, Brazil’s national supply company Conab has increased its estimate of area to be sown with cotton to 1.143 million hectares, up 21.8 per cent from 2016-17 season. As a result, volume of cotton produced may reach 1.855 million tons in 2017-18, up 21.3 per cent from the previous season. Yield per hectare is likely to be 1,629 kilos.

In Mato Grosso, the main cotton growing region in Brazil, 2017-18 cotton area is forecast to increase by 18.9 per cent compared to last season to 746,500 hectares. Output is expected to increase by 21.1 per cent to 1.224 million tons.

In international trade, Brazil’s cotton exports decreased 31.3 per cent during January-February this year to 54,300 tons, according to data from the secretariat of foreign trade (SECEX).