Brazilian cotton prices withstand pressure in early May

Cotton prices in Brazilian market withstood pressure from agents and processors who bid lower prices, as any sellers were unwilling to lower their quotes for cotton batches. Thus, this month (till May 10) the CEPEA/ESALQ Index for cotton increased by a slight 0.31 per cent, and, on the average of the month, it is 20.7 per cent higher than the export parity.

Post-May 10, however, sellers were slightly more flexible about prices, following the downward trend of prices abroad and the US dollar depreciation against Real. On May 10, the US dollar closed at 5.231 BRL, the lowest level since January 14.

“In general, liquidity is low. Agents and processors are only buying small volumes, aiming to replenish inventories and/or meet urgent demands,” the Center for Advanced Studies on Applied Economics (CEPEA) said in its latest fortnightly report on Brazilian cotton market.

For the 2020-21 cotton season, agents and processors are trying to buy cotton for delivery in the second semester of 2021. On the other hand, cotton farmers have reported high sales of the 2020-21 crop and are now focused on the current low soil moisture in some regions and the possible effects of this scenario on crops productivity.

In São Paulo, Paraná and some areas in Bahia, the harvesting of cotton crop has begun, but the volume harvested is still low.

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