Contracts support values

Brazilian cotton prices kept firm during November, even with the slow market pace. Buyers and sellers remained focused on accomplishing contracts. Between October 31st and November 30th, the CEPEA/ESALQ Index for the type 41-4 (delivered in Sao Paulo city) upped 0.76 percent in Real, closing at 1.1995 real or 0.6701 dollar a pound on Friday, Nov 30th.

As normally occurs at the end-of-the-year, trades move slowly - from now on, players should keep focused on accomplishing contracts. Growers should also turn their attentions to the planting in the next days.

Differently from the previous years, cotton exports in November and in the next months should reach good volumes, since exports have been remunerating more than the domestic trades. The reason is that even with the export parity near to 1.00 real per pound, the Pepro premium (from federal government) for those who export from November 2007 to April 2008 is up to 0.44 real a pound, which total at least 1.44 real a pound.

According to the Brazilian Commodity Exchange (BBM), until Nov 30th, 1.2 million tons from the 2006/07 crop were already traded. Of this total, 585.5 thousand tons are destined to the domestic market and 617.7 thousand tons, to the international one.

The Cot A Index, an important reference of the international market, increased more than 42 percent from January 2005 until now. In the same period, the domestic values registered an stability - the CEPEA/ESALQ Index upped 0.1 percent, in nominal terms. Among other factors, the exchange rate also contributed to that - the Real valuated 33.6 percent against the dollar between December 30/2004 and this Friday, Nov 30th.


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