Devaluations abroad and higher domestic supply press down prices

Cepea, September 17th, 2021 – Cotton prices are still fading in Brazil, influenced by the supply increase in the national spot market and devaluations abroad. Still, liquidity was not high in the first fortnight of September, which may be linked to the dollar fluctuation in that period.

 

Purchasers were putting pressure on values, claiming difficulties to pass on to by-products the current high production costs. Some sellers agreed to lower asking prices, while others did not, focusing on cotton processing.

 

The CEPEA/ESALQ Index for cotton closed at 5.2685 BRL/pound on Sept. 15, 1.6% down in the fortnight. The average between Sept. 1st and 15, of 5.3373 BRL/pound, is 4.5% higher than that in the first half of August.

 

CONAB – Data released by Conab (Brazil’s National Company for Food Supply) on Sept. 9 estimated the Brazilian cotton area at 1.37 million hectares in the 2020/21 season, 0.4% larger than that previously reported, but 17.7% smaller than that in the 2019/20 season. Productivity and production estimates were revised up too compared to that previously reported, by 0.33% and 0.72%, respectively, to 1,720 kg/hectare (4.6% down from that last season) and 2.357 million tons (21.5% down from that last season).

 

Domestic consumption continued forecast at 715 thousand tons, and exports in 2021, at 2.1 million tons, 19.2% up and 1.2% down from that in the 2019/20 season. Ending stocks are predicted at 1.31 million tons, 1.3% up from that reported in August, but still 25.9% down from that last season.

 

EXPORTS – Data from Secex (Foreign Trade Secretariat) show that, in August, Brazil exported 50.8 thousand tons of cotton, 17.3% less than that in July/21 and 53.13% down from that in August/2020. This is the lowest monthly volume exported since August 2019. Last month, the major destinations for the Brazilian cotton were Vietnam (20%), Pakistan (20%), Bangladesh (13%), Indonesia (13%), Turkey (11%) and China (10%).

 

(Cepea-Brazil)

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