Cepea, October 16, 2020 – Cotton prices increased in the Brazilian market in the first fortnight of October. As many farmers had made cash flow, they were unwilling to lower asking prices for the low volume made available in the spot market. These agents are aware of the prices paid from exports – which have been more attractive than remuneration in the domestic market – and focused on delivering the product previously purchased.
Brazilian cotton farmers are also focused on processing the product from the 2019/20 crop, which, until October 1st, had reached 60% of the Brazilian output, according to data from Abrapa (Brazilian Cotton Producers Association). In Mato Grosso, processing has reached 55% of the crop, and in Bahia, 69%.
As regards demand, the purchasers who needed to replenish inventories ended up paying higher prices for the product, primarily for higher-quality cotton. However, most volumes sold in the first half of the month were small. Other agents from processors stayed away from the market, working with the product previously purchased and being delivered.
The CEPEA/ESALQ Index for cotton rose by 10.3% between September 30 and October 15, closing at 3.5616 BRL per pound on Oct. 15.
EXPORTS IN SEPTEMBER – According to data from Secex (Foreign Trade Secretariat), in September (21 working days), Brazil exported 158.9 thousand tons of cotton, 45.8% more than that shipped in August, but 3.5% less than that from Sept/19 (164.6 thousand tons). China and Vietnam received almost 50% of all the volume Brazil exported last month. Revenue doubled between August and September, to 230.8 million USD last month, but dropped 12.7% compared to that from Sept/19.
CONAB – Data released on October 8 indicate that the Brazilian cotton production in the current crop (2019/20) is estimated to amount 3 million tons. For the 2020/21 crop (which starts to be planted between November and December/20), the output is forecast at 2.82 million tons, 6.2% down compared to that in the previous season.