Between February 25 and March 15, the CEPEA/ESALQ Index for cotton rose by 1.45 per cent, closing at BRL 6.9860/pound on March 15, according to the latest fortnightly report on Brazilian cotton market released by the Center for Advanced Studies on Applied Economics (CEPEA).

“Aware of the recent oil valuations, sellers raised asking prices for cotton. However, purchasers are concerned about the economic situation in Brazil, lowering bidding prices for the product. Thus, only a few buyers were interested in closing deals in the spot market, and agents from some processors reported high stocks of by-products, postponing deliveries of the cotton already purchased. Also, some processors reduced activities.

“This scenario and the high increase of freight costs constrained new deals in the first half of March. The agents who closed deals and needed to hire freight for delivery seemed very concerned about costs,” the report said.

Meanwhile, Conab (Brazil’s National Company for Food Supply) has released a report which estimates the country’s cotton area in 2021-22 season at 1.6 million hectares, 4.16 per cent larger than that estimated in February and 16.8 per cent larger than the last season. Productivity is forecast to increase by 2.5 per cent to 1,765 kilograms/hectare. Thus, the Brazilian cotton output is expected to be 19.7 per cent higher than that in 2020-21, totalling 2.82 million tons in 2021-22 (+4.15 per cent compared to that previously estimated).

In Mato Grosso, the main cotton producing province in the country, Conab estimated the area to be sown with cotton at 1.14 million hectares, 4.31 per cent larger than that estimated in February 2022 and 13.8 per cent larger than that in 2020-21. Productivity is forecast unchanged at 1.739 kg/hectare. Production estimates were revised up by 4.31 per cent in the monthly comparison and by 22.6 per cent compared to that in the season before, to 1.982 million tons in 2021-22.

In Bahia, the second-largest cotton producing province, the cotton area is estimated to be 5.33 per cent larger than that forecast in February 2022 and 14.8 per cent larger than that last season, at 306,100 hectares. Thus, the output was revised up by 5.15 per cent compared to that previously reported and by 14.4 per cent compared to that last season, estimated at 579,600 tons. Productivity is forecast at 1,894 kg/hectare.

Fibre2Fashion News Desk (RKS)