International demand keeps Brazilian cotton prices stable

05 Jun '24

2 min read

International demand keeps Brazilian cotton prices stable

Pic: Adobe Stock

Insights

In May, international demand for North American cotton surged, boosting prices in the Far East and ICE Futures in New York.
This trend supported Brazilian cotton prices despite the ongoing 2023-24 harvest.
CEPEA reported a 7.3 per cent increase in export parities FAS and a 5.82 per cent rise in the Cotlook A Index.
Dollar also appreciated against the real.

The international demand for North American cotton surged in May, significantly impacting global markets. Prices in the Far East rose, bolstering values at ICE Futures in New York. This trend has positively influenced Brazilian cotton prices, which have been buoyed by higher export parity values, despite the ongoing harvest of the 2023-24 crop, which is anticipated to yield a good production, as per the Centre for Advanced Studies on Applied Economics (CEPEA).

CEPEA’s recent calculations indicate that export parities FAS (Free Alongside Ship) increased by 7.3 per cent from May 20-27. By May 27, the parities were BRL 4.0868/pound ($0.7902/pound) at the port of Santos (SP) and BRL 4.0973/pound ($0.7922/pound) at the port of Paranaguá (PR). Concurrently, the Cotlook A Index, representing product delivered in the Far East, rose by 5.82 per cent, reaching $0.9085/pound on May 27. Additionally, the dollar appreciated by 1.23 per cent against the Brazilian real during the same period, closing at BRL 5.172 on May 27, CEPEA said in its latest fortnightly report on the Brazilian cotton market.

Domestically, the CEPEA/ESALQ cotton Index saw a minor decline of 0.54 per cent, ending at BRL 3.9024 ($0.74) per pound on May 31.

Data from the Secretariat of Foreign Trade (SECEX) reveals a significant increase in Brazilian cotton shipments in May. In the first 12 producing days of the month, exports totalled 141.4 thousand tons, marking a 134.4 per cent increase compared to the entire month of May last year, which recorded 60.32 thousand tons. However, this figure was still 41.4 per cent lower compared to April 2024, which saw shipments of 241.5 thousand tons.

Over the 2022-23 season (from August 2023 to the partial of May 2024), Brazil exported 2.265 million tons of cotton, reflecting a 56.3 per cent increase from the 2021-22 crop (August 2022-July 2023), which totalled 1.45 million tons.

Fibre2Fashion News Desk (KD)

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