Decreasing prices in this crop transition

Brazilian cotton prices accumulated a decrease in May, period of transition from one crop to another. From April 30th to May 30th, the CEPEA/ESALQ Index for the type 41-4 (delivered in Sao Paulo city, payment in 8 days - the most common commercialization) dropped 2.43 percent in Real, closing at 1.2788 real or 0.7845 dollar a pound on Friday. Few textile mills were willing to trade. Those that purchased some volumes, traded at lower values, once wholesalers and traders were intending to sell out stocks from the 2006/07 crop.

Growers were focused on the first Pepro's auction for this crop (2007/08), which happened on May 15th. Of the volume offered (341 thousand tons), 100 percent was accomplished.

Concerning the 2007/08 crop, agents are waiting for the supply from the states of Mato Grosso and Bahia, major Brazil's producers. It is important to remember that there is a significant volume of anticipated contracts already traded, especially to the international market, to delivery from July on.

According to the Brazilian Commodity Exchange (BBM), until the end of May, 901 thousand tons of the cotton from 2007/08 crop were already traded, which represents 58 percent of the total projected by the Conab (1.55 million tons). Of the total registered by the BBM, 236 thousand tons is directed to the domestic market and 664 thousand tons, to the international one. (Cepea - Brazil)

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