Small supply stabilizes prices in Brazil

Brazilian cotton market has been strongly affected by the financial international crisis. In the second fortnight March, the values were the lowest since June 1996 (Cepea series) in real terms and, in nominal terms, since December 2005.

Day by day, the CEPEA/ESALQ Index decreased. But, in the last week of March, the prices got stable due to the smaller supply. In general terms, the domestic liquidity kept low. Firm international values reinforced the retreated position of growers. The CEPEA/ESALQ Index dropped 3.16 percent between March 16th and 31st, closing at 1.1153 real or 0.4811 dollar per pound, on March 31st.

In this context, Brazilian government announced Pepro auctions also for the current crop. This auction intended to increase the cotton growers' income in a period of low prices and high costs. Regarding 2008/09 crop, the weather remained positive for the fields' development in all Brazilian regions. Therefore, agents expect that harvest activities start between May and June in the main producing regions. (Cepea - Brazil).

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