Low demand keeps pressing quotations down

Brazilian cotton prices kept moving down during the first fortnight of February. Between January 30th and Feb 16th, the CEPEA/ESALQ Index for the type 41-4 (delivered in Sao Paulo city, payment in 8 days - the most common commercialization in Brazilian market) dropped 2.1 percent in Real, closing at 1.1556 real or 0.5068 dollar per pound on Feb 16th. The pressure came from the weak demand, which is linked especially to low liquidity in the wholesale market.

According to the Brazilian Commodity Exchange (BBM), until Feb 16th, 86 percent of the cotton production from 2007/08 crop were traded - the volume projected by Conab for the season is of 1.602 million tons.

Concerning the global 2008/09 cotton crop, ICAC (International Cotton Advisory Committee) report published on Feb 2nd showed that the production should reduce 9.61 percent, totaling 23.7 million tons. The consumption is expected to fall 9.09 percent, to 24 million tons. As a consequence, global exports should decrease 20.96 percent, to 6.6 million tons. Ending stocks are projected at 12.1 million tons, falling 2.42 percent. The average price forecasted for 2008/09 crop is of 0.61 dollar per pound, against 0.7290 dollar per pound in the previous crop, based on Cot A. (Cepea - Brazil)

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