Cepea, February 4, 2020 – Cotton quotes increased in the Brazilian market in January, since sellers were unwilling to lower asking prices. The trading pace, in turn, was slow, due to the dispute between purchasers and sellers – who sometimes agreed to reduce asking prices, depending on the quality of the cotton available. Thus, some deals were closed during the month. As regards exports, although shipments decreased last month, they were much higher than in January 2019.
Thus, between December 30 and January 31, the CEPEA/ESALQ cotton Index, with payment in 8 days, rose 4.5%, closing at 2.8099 BRL per pound on Jan. 31. The average in January was 2.7195 BRL/pound, Compared to December/19, that average is 1.8% higher.
In late January, some higher quality batches were supplied in the market, however, all of them had at least one quality problem, which reduced liquidity. Some of the purchasers were cautious, analyzing the market before bidding prices. It is worth to mention that, in light of the difficulties to find cotton within the required standards in Bahia, some deals were closed with growers from Mato Grosso.
Besides, some Brazilian processors tried to close new deals at fixed prices to meet demands. On the other hand, trading companies were aware of the quotes abroad, supplying batches at higher prices in the Brazilian market and bidding higher prices in the spot market too. In general, agents were focused on the delivery of the cotton previously purchased.