MUMBAI (Commoditiescontrol) - Cotton prices in Brazil are on a rising spree in the midst of delayed harvesting due to rains in the Cerrado region which is causing supply crunch in the domestic markets.
Purchasers with needs for prompt delivery, such as processors in the northeastern and southern regions, are accepting whatever asking rates quoted by sellers.
However, as prices are increasing, few processors are using their own stocks, while others are reducing activities due to weak sales and low perspective for recovery in the second semester this year.
Despite low quality of most cotton available - end of the 2013-14 season - agents reported trades involving cotton type 41-4 and above in Mato Grosso and Bahia States. Some sellers, in turn, are retracted.
Between 8-15 June, the CEPEA/ESALQ Index, with payment in 8 days, for cotton type 41-4 (including freight to Sao Paulo city) increased 2 percent, closing at 2.1019 BRL per pound (0.671 dollar/pound) on 15th June. The average of June, at 2.0670 BRL (0.664 dollar) per pound, is 1.33 percent lower than in May 2015 and 2.26 percent higher than in June 2014 - values deflated by IGP-DI (Brazil’s general price index) from May 2015.
Export trades decreased last week due to low export parity, pressured by the retreat of Cotlook A and the drops at New York Stock. CEPEA calculations showed that in the partial of June export prices to shipment between July-Dec 2015 averaged 0.6867 dollar per pound, 1.21 percent down the average of May 2015. To shipments in the second semester of 2016, the average is at 0.7036 dollar per pound, drop of 2.6 percent compared to the previous month.
Between 8-12 June, export parity calculated by CEPEA, FAS (Free Alongside Ship) at Paranagua port, at 1.9334 BRL (0.621 dollar) per pound, dropped 1.11 percent compared to last week (from 1-5 June). In the same period, Cotlook A Index increased 0.21 percent and dollar decreased 1.28 percent regarding Real.
In the same period, import parity released by CONAB (National Company for Food Supply), based on Cotlook A Index, CIF Sao Paulo averaged 2.5293 BRL (0.813 dollar) per pound, moving down 0.72 percent compared to the first week of June (2.5477 BRL or 0.809 dollar per pound). In this case was considered dollar at 3.1123 BRL.
From April to May 2015 Brazilian exports of cotton retreated 66.2 percent, at 18.4 thousand tonnes (Secex data). But in the partial of 2015 (until May), shipments were 51.4 percent higher than in the same period last year, totaling 229 thousand tonnes. The revenue of May 2015 was 26.6 million dollars, 67.4 percent lower than in April. Brazilian imports retreated 17 percent in May compared to April, totaling 161.5 tonnes. In the accumulated of the year, imports decreased expressive 96.8 percent.
The global output might total 24.2 million tonnes in 2015-16 crop, 6 percent lower than in the 2014-15 season. Consumption should increase 3.4 percent and global trades can drop 1.35 percent, totaling 7.3 million tonnes (USDA data).
(By Commoditiescontrol Bureau; +91-22-40015522).
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