Brazilian Cotton Prices Drop 7.3% in July

Most trades in the Brazilian cotton market were limited to small volumes in July. Although sellers were more flexible regarding asking prices, purchasers were not interested in trading in the spot market, bidding prices lower than those asked by sellers. Besides, active processors were complaining about the quality of the available cotton.

Between June 30 and July 31, the CEPEA/ESALQ Index, 8-day payment terms, for cotton type 41-4, delivered in São Paulo, dropped 7.3 per cent, closing at 2.4665 BRL ($0.7915) per pound on July 31, Center for Advanced Studies on Applied Economics (Cepea-Brazil) said in its latest fortnightly report on cotton trade.

During the second fortnight of July, most Brazilian companies were found working with cotton previously purchased, and the interest in new acquisitions was only for shipment in the coming months.

In the coming months, cotton prices are expected to drop even more due to the increase in volume of the 2016-17 crop in the market.

With prices dropping, most growers allocated their higher quality cotton to fulfil the previously closed contracts. Trading companies based on international prices and dollar, however, were more flexible regarding asking prices in the spot market, mainly for shipment in the coming months, Cepea-Brazil said.