Sellers willing to trade and purchasers away from the market press down quotes in BR in April

Cepea, May 5, 2020 – Liquidity was low in the Brazilian cotton market in April. Sellers were interested in trading the product, willing to lower asking prices in the spot market, mainly for the low-quality cotton. However, demand was low last month. Only a part of the industry was operating, and many agents preferred to use the product stocked. It is important to mention that the companies that produce hospital supplies account for a small share of the textile chain.

 

Thus, between March 31 and April 30, the CEPEA/ESALQ cotton Index, with payment in 8 days, decreased by 6.3%, closing at 2.6628 BRL per pound on April 30. The monthly average, at 2.7705 BRL per pound, is 5% lower than that from March.

 

Concerning the coming seasons, trades were closed at higher values compared to those currently practiced. Sellers are now expecting purchasers to accomplish these contracts, given that there are uncertainties regarding the global impacts of the covid-19 pandemic on the textile sector.

 

Although international prices were weak in April, the strong dollar and the need to flow part of the Brazilian production led players to close new export deals. Concerning the next two seasons (2019/20 and 2020/21), most contracts were based on ICE Futures. Other players fixed prices, in Real or in dollar.

 

TEXTILE CHAIN – Secex data indicate that, in March/20, expenses with imports totaled 381.7 million USD, 0.2% up in relation to that in the month before, but 5.8% down compared to that in March/19.

 

(Cepea-Brazil)

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