Larger exports should support prices in Brazil

Brazilian cotton imports should increase in the next season (2006/07), and exports must enlarge expressively. It is already registered trade of 678 thousand tons, which represents around 52 percent of the total volume estimated (between 1.22 and 1.3 million tons).

Of the total of 678 thousand tons, 76 percent are designated to the international market (516.9 thousand tons) and 24 percent, to the domestic market (161.1 thousand tons). It means lower supply in Brazil at higher prices.

Considering these figures, 587 thousand tons still remain to be traded. However, the Brazilian demand is around 890 thousand tons. In this context, imports should increase.

Over the last days, Brazilian cotton prices keep moving down, pressured by the lower demand. Moreover, some growers, in need of cash, traded at lower values. Last Wednesday, November 1st, the CEPEA/ESALQ Index averaged 0.5894 dollar per pound, down 0.4 percent in relation to the previous day. Comparing to September 29, however, the Index increased 1.2 percent. In general terms, the supply keeps low, with growers focusing on accomplishing contracts.

In some areas of Sao Paulo and Parana states, some growers have already started the next crop (2006/07) planting activities. From November on, these activities should be intensified in the Center-Southern region of Brazil.

According to Conab (National Company for Food Supply), the cotton cultivated area in 2006/07 season in Sao Paulo state should reduce between 13 and 17 percent, at around 36 and 38 thousand hectares.

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