MUMBAI (Commoditiescontrol) - Cotton prices in Brazil are trading on the upside helped by strong demand for high quality lint and low supply for prompt delivery, according to CEPEA.
While some Brazilian processors are buying cotton to prompt delivery and consumption, others are just receiving the product from trades closed previously. Spinning factories are still complaining about low liquidity in the by-product market. Some have already slowed down production due to high stocks.
Producers, in turn, are offering batches remaining from the 2013-14 crop, firm in asking prices even for low quality cotton. They are focused on harvesting of the 2014-15 crop that should intensify in the coming months. CEPEA collaborators said some producers have already traded, at least, 50 percent of the crop. Thus, when the crushing starts, part of the production will already be compromised.
Between June 16-23, the CEPEA/ESALQ Index, with payment in 8 days, for cotton type 41-4 (including freight to Sao Paulo city) increased 0.78 percent, closing at 2.1183 BRL per pound (0.687 dollar/pound) on 23rd June. The average of June (until 22nd), at 2.0828 BRL (0.669 dollar) per pound, is 0.58 percent lower than in May 2015 but is 3.04 percent higher than in June 2014- values deflated by IGP-DI (Brazil’s general price index) from May 2015.
With recent rises, the average of domestic prices last week was 11 percent higher than the export parity, favoring internal trades. The dollar weakening and drops in Cotlook A Index pushed down external trades.
Between June 15-19, the export parity calculated by CEPEA, FAS (Free Alongside Ship) at Paranagua port, at 1.9028 BRL (0.616 dollar) per pound, dropped 1.7 percent compared to last week (from June 8-12). In the same period, Cotlook A Index decreased 0.95 percent and dollar, 0.69 percent regarding Real.
In the same period, import parity released by National Company for Food Supply (Conab), based on Cotlook A Index, CIF Sao Paulo averaged 2.4960 BRL (0.808 dollar) per pound, 1.32 percent down compared to the previous week (at 2.5293 BRL or 0.819 dollar per pound).
According to BBM (Brazilian Commodity Exchange) data calculated by CEPEA, 84.5 percent of 2013-14 crop, forecast at 1.734 million tons, had already been traded until 22nd June. From the total, 54.6 percent was allocated to Brazilian market and 45.4 percent, to exports. Regarding the 2014-15 crop, forecast at 1.507 million tons, 36 percent had already been traded in the same period.
The daily average of shipments until the third week of June was 900 tons, almost 6 percent down compared to the same period in May 2015 and 17 percent lower than in June 2014. In revenue, the daily average was 1.3 million dollars, 4.16 percent down compared to the previous month and 40 percent lower than in June 2014. The average price of the third week of June, in dollar, dropped 1.7 percent compared to May 2015 at 1,470.6 dollars per ton. In Real, the drop was equal to 3.36 percent, at 4,577.28 BRL per ton (Secex data).
(By Commoditiescontrol Bureau; +91-22-40015534)
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