Fierce competition between agents presses down Index in August

Cepea, September 3 2019 – As cotton processing and the deliveries of the cotton purchased through term contracts advanced in Brazil in August, some higher quality batches were made available in the domestic spot market. Thus, processing plants were bidding lower prices than those asked by sellers, hampering deals. Some plants were receiving the cotton previously purchased, while some traders had higher purchase needs in order to deliver the product previously acquired.


With the fierce competition between agents, the CEPEA/ESALQ cotton Index, with payment in 8 days, decreased 1.4% in August, closing at 2.4698 BRL per pound on August 30. The average Index in August, at 2.4667 BRL per pound, is 6% lower than that from July/19.


Agents from trading companies were not active in the market, focused on the contracts previously closed – these agents left the market due to international price drops, despite the US dollar appreciation against Real in August.


Data from Imea released in the second fortnight of August indicated that cotton harvesting has reached 78.48% of the total area estimated for Mato Grosso State (1.072 million hectares).




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