Cepea, October 17 2019 – Cotton prices increased in Brazil in the first fortnight of October. Between September 30 and October 15, the CEPEA/ESALQ cotton Index, with payment in 8 days, rose 0.7%, closing at 2.4927 BRL per pound on Oct. 15.
Sellers were not willing to lower asking prices, aware of the high price levels in the international market, and focused on the delivery of the batches previously purchased as well as on cotton processing. Besides, the availability of high quality cotton was low and growers claimed to have already sold most of the output. As regards the demand, processing plants were trying to pay less for the product, while working with the cotton stocked – or previously acquired through contracts. When in urgent needs, mainly for higher quality batches, purchasers ended up paying higher prices.
CONAB – After increasing sharply for two seasons, the first crop survey from Conab (National Company for Food Supply), released on October 10, estimates the Brazilian area to be sown with cotton in the 2019/20 season to increase by a slight 1.2% compared to the previous crop, reaching 1.637 million hectares – sowing should start in November. The average productivity, in turn, may decrease by 1.5%, compared to the 2018/19 crop, to 1,659 kilos per hectare. Thus, the Brazilian output is forecast at 2.716 million tons, a slight 0.4% lower than that in 2018/19 (2.726 million tons).
As consumption was kept stable in Brazil (although the volume to be exported may surpass 1.5 million tons in 2019), ending stocks may be two-fold the Brazilian consumption in a year.
Altogether, Mato Grosso and Bahia should produce more than 88% of the Brazilian output in the 2019/20 season. Thus, as the cotton area in MT was kept stable, at 1.093 million hectares, and the average productivity is 1.1% down, at 1,643 kilos per hectare, the volume to be harvested is forecast at 1.795 million tons, 1.1% lower than that in 2018/19 (1.816 million tons). Bahia, in turn, may harvest 608.3 thousand tons in 2019/20, 1.8% more than that in the previous crop. Despite the area increase, by 5.4% (349.9 thousand hectares), the average productivity may decrease 3.4%, to 1,738 kilos per hectare.
IMEA – In a report released on October 7, Imea (Mato Grosso Institute of Agricultural Economics) estimated the cotton output from Mato Grosso to total 1.846 million tons in the 2019/20 crop. Of this total, 50.53% may have been traded, 5.61 percentage points up compared to the average in the last five years (44.94%), but 11.54 p.p. down compared to the same period in the 2018/19 season (62.07%).
EXPORTS AND IMPORTS – According to data from Secex, Brazil exported 142.4 thousand tons of cotton in September, more than three-fold that shipped in August (42.1 thousand tons) and 62.1% more than the 87.9 thousand tons exported in Sept/18. As for imports, Brazil imported 92 tons of cotton last month, 49.1% more than the volume imported in August, but 88.1% less than that from Sept/18 (775.8 tons), according to Secex.