Cotton Prices Remain Firm In Brazil; Half Of Planted Area Reach Harvest Stage

MUMBAI (Commoditiescontrol) - Cotton prices in Brazil are continuously increasing even as harvesting reaches more than half of the planted area, while trades are seen slow.

Producers are delivering cotton from contracts and readjusting prices or holding cotton for future sales, making availability tight on spot markets. Some purchasers are cautious about asking prices. Thus, only some trades of small volumes have been registered for prompt delivery.

Between August 10-17, the CEPEA/ESALQ Index, with payment in 8 days, for cotton type 41-4 (including freight to Sao Paulo city) increased 1.27 percent, closing at 2.2013 BRL (0.631 dollar) per pound on August 17. In the partial of the month (until 17th), the Index averaged 2.1708 BRL (0.622 dollar), 2.55 percent up compared to July 2015 and 20 percent higher than in August 2014 - values deflated by IGP-DI (Brazil’s general price index) from July 2015.

Many producers are focused on accomplishing contracts for the domestic and international markets. High dollar and increases on ICE futures stimulated the closure of some contracts for exports or for the domestic market. This month, exports price for shipment between August and December 2015 averaged 0.6742 dollar per pound, 2.19 percent down compared to the average of July 2015.

Regarding the global production, USDA pointed a decrease of 6.8 percent in the 2015-16 crop compared to the previous, to 23.7 million tons. With low production and consumption 2.5 percent up (24.9 million tons), global stocks should decrease 5 percent.

In Brazil, the National Company for Food Supply (CONAB) pointed production in the 2014-15 crop at 1.5 million tons, 13.3 percent lower than in the previous season. Productivity should decrease 0.3 percent, at 1,541 kg/ha and seeded area, 13 percent (totaling 976.2 thousand ha).

Between August 7-14, the export parity calculated by CEPEA, FAS (Free Alongside Ship) at Paranagua port, at 2.1080 BRL (0.604 dollar) per pound, 1.86 percent down compared to the previous week (from August 3 and 7). In the same period, Cotlook A Index decreased 1.63 percent and dollar increased 0.17 percent against Real.

(By Commoditiescontrol Bureau; +91-22-40015532)