Despite the inter-harvest period in Brazil, the prices of cotton did not fluctuate significantly in February. The prices for cotton fell by only 1.5 percent between January 31 and February 28, closing at BRL 5.1750/pound on February 28, according to the CEPEA/ESALQ Index.
The domestic cotton market was influenced by slight fluctuations in the US dollar and foreign prices. However, the fierce competition between agents for price and the quality of available batches helped to keep the prices stable in the national spot market, the Sao Paulo-based Center for Advanced Studies on Applied Economics (CEPEA) said in its latest fortnightly report on the Brazilian cotton market.
Cotton processors were cautious in their purchasing of the product in February due to the low sales performance of finished products. Farmers were also monitoring crops, as excessive rains in some regions delayed the soybean harvesting and the sowing of the second crop of cotton. This drove many farmers away from the spot market.
The monthly average of the CEPEA/ESALQ Index in February was BRL 5.2389/pound, 1.7 percent lower than that from January 2023 and 27 percent below that of the previous year in real terms.
Agents are currently trying to close deals for both the 2021-22 and 2022-23 crops, with prices based on the CEPEA/ESALQ Index and on contracts at ICE Futures (NY). For exports, agents have been interested in trading the 2023-24 crop.
According to data from ABRAPA, the Brazilian Cotton Growers Association, the sowing activities for the 2022-23 Brazilian crop of cotton are nearing completion. As of February 23, it had reached 99.5 percent of the expected area.
The Cotton Outlook released a report on February 24, estimating the world 2023-24 crop of cotton at 25.398 mn tonne, 2 percent higher than the expected figure of 24.892 mn tonne for 2022-23. The world consumption of cotton, on the other hand, was estimated to be 3.6 percent lower at 24.553 mn tonne in the 2023-24 season.
In Brazil, the cotton output for the 2023-24 season is expected to be 2.8 mn tonne, which is 3.4 percent lower than the previous year. However, the domestic consumption is predicted to increase by 3.7 percent to 700 thousand tons in the 2023-24 season.
