Index drops by 5% in March, but monthly average is still a record

Cepea, April 1st, 2021 – The Brazilian market of cotton had two distinct moments in March: in the first days of the month, prices rose, which had been observed in January and in February, boosted by demand, sellers’ firm stance concerning prices and low supply in the domestic spot market. Thus, the CEPEA/ESALQ Index for cotton hit 5.2251 BRL per pound on March 4, a nominal record in the series of Cepea, which began in 1996.

 

On the following days, high prices in Brazil and uncertainties related to the increase in the number of covid-19 cases in the country and the consequent increase in the restrictive measures to fight the pandemic drove agents away from the spot market. In this context, supply surpassed demand, and prices began to decrease. In general, only small volumes were purchased sporadically, also because agents were opting for working with the cotton stocked and/or being delivered (previously purchased).

 

As regards sellers, only the farmers with higher needs were willing to lower asking prices. It is worth to highlight that most cotton farmers in Brazil have made cash flow and that a large volume of the coming crop has been sold.

 

On the average of the month (Feb. 26 – Mar. 31), the CEPEA/ESALQ Index for cotton dropped by 4.96%, closing at 4.8088 BRL on March 31. The decrease in the export parity influenced prices drops along March too.

 

However, the monthly average for this Index closed at 5.0055 BRL/pound, 4.5% higher than that in February and a record, in nominal terms.

 

(Cepea-Brazil)

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