MUMBAI (Commoditiescontrol) - Brazilian cotton prices continue to trade on the upside amid spurt in exports, restricted availability in domestic markets and delayed harvest. Brazilian sellers strengthened the accomplishment and closure of export contracts in August, motivated by the strong dollar. At the same time, Brazilian cotton is competitive in the international market.
The CEPEA/ESALQ Index, with payment in 8 days, for cotton type 41-4 (including freight to Sao Paulo city) raised 5.66 percent in August, closing at 2.2577 BRL (0.621 USD) per pound on Monday.
Export parity increased 6.1 percent in the month, pushed up by high dollar. In August, dollar rose 6.32 percent, at 3.6330 BRL on Monday, the highest nominal value since Feb./03.
In August, the CEPEA/ESALQ Index was 1.5 percent up compared to export parity, but the average in dollar, cash payment, was 13.35 percent down (at 0.6219 USD/pound) compared to the average of Cotlook A Index (0.7177 USD/pound) and 4.53 percent lower than the first contract at ICE Futures (0.6514 USD/pound). Thus, the competitiveness of Brazilian cotton increased in the international market.
According to CEPEA figures, in August, export prices to shipment from September to December/15 averaged 0.6785 USD per pound, 1.57 percent down compared to the average of July/15 and 7.61 percent lower than in the same period last year - however, in August/14, dollar averaged 2.2683 BRL. For exports in the second semester of 2016 (regarding the 2015/16 season), the average in August was 0.7013 USD per pound, 1.28% down compared to the previous month.
Between August 24 and 28, the export parity calculated by CEPEA, FAS (Free Alongside Ship) at Paranagua port, at 2.2190 BRL (0.620 USD) per pound, increased 1.14 percent compared to the previous week (from August 17 and 21). In the same period, Cotlook A Index dropped 1.84 percent and dollar rose 3 percent regarding Real.
Regarding the import parity released by CONAB (National Company for Food Supply), based on Cotlook A Index, CIF Sao Paulo, it averaged 2.8416 BRL (0.793 USD) per pound last week, only 0.34 percent down compared to the previous week (at 2.8513 BRL or 0.820 USD per pound).
Between August 24 and 31, the CEPEA/ESALQ Index increased 1.07 percent. The average of August, at 2.2017 BRL/pound (0.626 USD) is 4.01 percent higher than the average of July/15 and 21.60 percent up compared to August/14 - values deflated by IGP-DI (Brazil’s general price index) from July/15.
(By Commoditiescontrol Bureau; +91-22-40015532)
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