Cepea, February 18, 2020 – Although Brazilian sellers were active in the market in the first fortnight of February, they were unwilling to lower asking prices, underpinning quotes in Brazil. In general, the gap between price and quality (asking and bidding prices) continued to lower liquidity. A few batches of higher quality cotton were available in the Brazilian market in the first half of the month, hampering new deals for prompt-delivery even more. In this context, between January 31 and February 14, the CEPEA/ESALQ cotton Index, with payment in 8 days, rose 1.28%, closing at 2.8458 BRL per pound on February 14.
Agents from trading companies were aware of the international valuations for cotton and, thus, stayed away from the market – or asked higher prices when closing new deals. However, agents were focused on deliveries to the international market, which hit a new record volume in January. At the same time, part of the purchasers seemed more interested in closing new deals for the coming months (for the 2018/19 crop), for deliveries to processors in northeastern, southern and southeastern Brazil.
In the field, cotton crops in the 2019/20 season are in good conditions. Brazilian cotton growers are focused on crops development and preparing to end sowing in Mato Grosso.
According to a report from Imea released on February 7, sowing of the 2019/20 crop has reached 98.24% of the estimated area – against 98.51% in the same period last year, while the average in the last five years was 95.47%.
EXPORTS IN JANUARY – Brazilian cotton exports totaled 308.8 thousand tons in January, a record, according to data from Secex. That volume was 11% larger than that shipped in December (278.2 thousand tons), a staggering 165% higher than that from Jan/19 and 7.2% above the previous record – hit in October/19 –, at 288.15 thousand tons. It is worth to mention that exports in January were only higher than in the previous December is the years 2000 and 2020. Between August/19 and January/20, Brazil exported 1.34 million tons of cotton, 2.19% higher than the total shipped in the previous season (Aug/18 to Jul/19), at 1.3 million tons.
IMPORTS IN JANUARY – In January, Brazil imported only 14.2 tons of cotton, 80.2% less than that purchased in Dec/19 and 81.5% less than that acquired in Jan/19 – except for April/2009, when there were no volumes imported, that was the lowest amount (along with that from Nov/19) imported by Brazil since 1996.
CONAB – According to data released by Conab (Brazil’s National Company for Food Supply) on February 11, the Brazilian area to be sown with cotton in the 2019/20 season increased 2.5% compared to that previously reported and 5.3% compared to that in the previous crop, at 1.7 million hectares. Thus, production estimates were revised up to 2.82 million tons. Conab revised up the average productivity in the 2018/19 crop from 1,685 kilos per hectare to 1,717 kg/ha in January, but 3.8% down compared to that in the 2019/20 crop (1,646 kg/ha).
Both area and production in the 2019/20 crop from Mato Grosso should grow 3.8% compared to that estimated in January, to 1.16 million hectares and 1.9 million tons, respectively. As regards the 2018/19, production estimates were revised up by 2.9% compared to that previously forecast, to 1.87 million tons. For Bahia, Conab’s estimates have been stable for three months.