Import parity keeps pressuring down the domestic values

Brazilian cotton prices moved down during February, even with the lower supply. Buyers remained retreated, since the current levels are getting closer to the import parity.

Considering the first expiring date at the New York Board of Trade (Nybot), the import parity should be settled at 1.31 real per pound. If it was based on Cot A, prices could reach 1.45 real per pound. During February, the CEPEA/ESALQ Index decreased 2.5 percent in Real or 2.4 percent in dollar, closing the period at 1.4152 real or 0.6618 dollar a pound.

In general terms, trades moved at a slow pace in the last week. During last days, however, players are more willing to trade.

Regarding exports, the Foreign Trade Secretariat (Secex) shows that cotton exports totaled 28.4 thousand tons in January, 38 percent inferior to the volume exported in Jan/06 (45.8 thousand tons). The export values of Jan/07 was of 31.3 million dollars, resulting in an average price of 0.50 dollar per pound - it means, remunerated less than the domestic market.

About manufactured imports, it increased 14 percent (in volume) in January of December. In values, the raise was of 9 percent during the same period.


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