Sellers retract and prices rise in the Brazilian spot market

Cepea, November 4, 2019 – Despite the slight daily oscillations, cotton prices increased in Brazil in October. The boost came from sellers’ attitude – who were unwilling to lower asking prices –, while purchasers needed to pay more in order to buy new batches.


Between September 30 and October 31, the CEPEA/ESALQ cotton Index, with payment in 8 days, rose 1.5%, closing at 2.5119 BRL (0.6261 USD) per pound on October 31. The average in October, at 2.4948 BRL per pound, is 1.5% higher than that in September/19.


Some cotton growers were not in need of cash flow, due to sales of other commodities and/or the accomplishment of term contracts. Occasionally, these agents seemed interested in new sales, mainly for lower quality cotton. Thus, the availability of higher quality cotton in the spot market was low.


As regards purchasers, agents from processing plants were searching for small cotton amounts for urgent needs. Meanwhile, others were receiving the cotton previously purchased – or using the product stocked – and, thus, were away from the market. Deals for delivery in northeastern Brazil were also closed in late October, since agents from this region were paying more for the product.


Trading companies were bidding higher prices in the Brazilian market and exporting more cotton, due to the higher exports parity – which was reducing cotton supply in Brazil. It is worth to consider that even lower quality batches were being sold to the international market for delivery in the short term. Contracts for delivery in the second semester of 2020 (related to the product from the 2019/20 crop) were also closed in October.




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