Price drops to the level of May/06 in Brazil

Brazilian cotton prices decreased in May, returning to the levels of May/06, in real terms (discounted the inflation). From the beginning of the month to May 31st, the CEPEA/ESALQ Index (type 41-4, delivered in Sao Paulo city) devaluated 16.37 percent in Real, closing at 1.1690 real or 0.6088 dollar a pound this Thursday, May 31st.

The reasons for the downward trend are the supply from the 2006/07 crop, which should be a record, the stable demand in the domestic market and the valuation of the Real against the dollar, which stimulates imports. In general terms, textile mills traded few volumes, betting on new decreases.

Exports moved at a slow pace during the last month. Few contracts were settled at 0.59 dollar a pound for the cotton from the 2007/08 crop and at 0.60 dollar a pound for the product from the 2008/09 crop.

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