Brazil cotton prices hit highs amid export push, supply constraints

According to the CEPEA/ESALQ Cotton Index, the price increased by 3.43 per cent between August 30 and September 30, closing at BRL 4.0197 per pound at the end of the month.

The price increase was driven by a combination of factors, including a stronger dollar against the Brazilian real and rising international prices, which boosted export parity. This made exporting cotton more attractive to producers compared to domestic sales. Additionally, domestic supply remained limited, as many sellers were focused on fulfilling contracts, leading to firmness in pricing. Buyers in need of high-quality cotton had to accept the higher prices in order to secure deals, CEPEA said in its latest fortnightly report on the Brazilian cotton market.

For the 2024-25 crop, National Supply Company (CONAB) projects that Brazil's cotton planting area will reach 2 million hectares, a 3.2 per cent increase compared to the previous season. However, productivity is expected to decline by 2.1 per cent. Despite this, Brazilian cotton production is estimated to rise slightly by 1.07 per cent, reaching 3.675 million tons, which would set a new record.

On a global scale, the outlook for the 2024-25 cotton season predicts total production of 25.285 million tons, reflecting a modest 0.68 per cent increase from August 2024's estimates and a 0.83 per cent rise from the 2023-24 season's forecast. Global consumption is expected to decline slightly by 0.31 per cent from the previous month but increase by 0.75 per cent compared to the 2023-24 season, totalling 24.295 million tons. With supply outpacing demand by 4.1 per cent, global stocks are projected to grow.

For Brazil, the total supply in the 2024-25 season is forecast to reach 3.836 million tons, while domestic consumption is expected to be around 720 thousand tons.

Fibre2Fashion News Desk (KD)