Brazilian cotton prices fluctuate, climb 4.17% in mid-July

19 Jul '24

3 min read

Brazilian cotton prices fluctuate, climb 4.17% in mid-July

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Insights

In mid-July, domestic cotton prices fluctuated, influenced by increased crop volume and sellers' pricing flexibility, yet limited supply kept some prices firm.
Between June 28 and July 15, the CEPEA/ESALQ Index rose by 4.17 per cent.
Export prices dropped slightly, with CONAB forecasting a 16.9 per cent increase in Brazil's cotton planting area for 2023-24.

In mid-July, cotton prices in the domestic market of Brazil experienced fluctuations. On one hand, prices dropped due to the anticipated higher volume of the current crop entering the spot market and some sellers being more flexible with prices to clear out 2023 stock, as per the Centre for Advanced Studies on Applied Economics (CEPEA).

On the other hand, the limited supply in the spot market kept some sellers firm on their prices, prompting buyers to increase their offers. Between June 28 and July 15, the CEPEA/ESALQ cotton Index (payment in 8 days) rose by 4.17 per cent, closing at BRL 4.1353 (~$0.75) per pound on July 15.

Export parity prices (FAS) fell by 2.09 per cent from July 8 to 15, reaching BRL 3.8565 per pound (~$0.7080 per pound) at the port of Santos (SP) and BRL 3.8670 per pound (~$0.7099 per pound) at the port of Paranaguá (PR) on July 15. The Cotlook A Index (for product delivered in the Far East) decreased by 1.51 per cent in the same period, standing at $0.8150 per pound on July 15. The dollar's value against the real fell by 0.55 per cent in the same period, closing at BRL 5.447 (~$0.98) on July 15, CEPEA said in its latest fortnightly report on the Brazilian cotton market.

A report released by National Supply Company (CONAB) on July 11 indicated that the 2023-24 planting area in Brazil might reach 1.945 million hectares, an increase of 16.9 per cent compared to 2022-23. Productivity is expected to be 1,870 kg per hectare, a decline of 2 per cent from the previous year. Consequently, Brazil's output is forecast to increase by 14.6 per cent, reaching 3.636 million tons.

The USDA projected that Brazil could become the world's largest cotton exporter in the 2023-24 season, with exports reaching 2.7 million tons from August 2023 to July 2024, surpassing the United States, which had held the top spot since 1993-94. This shift is attributed to Brazilian production more than doubling over the past seven years, driven by technological advancements.

The USDA also forecast that the global cotton crop for 2024-25 might total 26.168 million tons, a 0.9 per cent increase from the June 2024 estimate and a 5.7 per cent rise compared to the 2023-24 season.

Global consumption is projected at 25.516 million tons, 3.4 per cent higher than in 2023-24, but still below supply levels.

World imports are expected to total 9.709 million tons, a 3 per cent increase compared to 2023-24. Global exports are also forecast at 9.709 million tons in 2024-25, representing a 0.9 per cent increase from the 2023-24 crop.

Fibre2Fashion News Desk (KD)

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