US Dollar Weakness Encourages Brazil To Buy US Cotton

On Monday, analysts at the Safras & Mercado agricultural trade advisory body in Brazil said that the dollar was weak and the supply of cotton in Brazil's northeast region was reduced. Brazil textile company began to purchase American cotton this month.

Miguel Biegai of Safras & Mercado said that the US cotton is entering Brazil at a price lower than that of Brazil cotton growers.

Textile enterprises simply buy American cotton.

Biegai said that the US cotton arrived at the Northeast port of Brazil at a price of 1.23-1.25 Real Brazil (US $0.73-0.74), compared to that of the northeastern cotton growing province of Bahia selling cotton at Brazil 1.30-1.32 per pound 1.30-1.32.

Brazil's recent purchase of US cotton has not been disclosed, but because of its good price, textile companies have been buying cotton.

Andrew MacDonald, President of Brazil Cotton Association, said that the weakness of the US dollar may be beneficial to the purchase of US cotton. However, he doubts that the enthusiasm of Brazil textile enterprises to purchase US cotton will cool down in July and August when Brazil's own cotton comes into the market.

According to the US Department of agriculture, Brazil imported 43672 bales of cotton at the end of January 2008 to March, less than 73462 of the same period last year.

The improvement of imports is only something that has happened in the near future.

Biegai said the textile industry would rather buy Brazil cotton because they know Brazil cotton and are familiar with cotton planting.

At present, this situation has not changed.

But the US dollar is 1.68 against Real, and the ICE futures exchange July contracts at 72.08 cents a pound. Textile mills are buying cheap American cotton, which will pressure domestic growers and prices will drop sharply.

The big buyers are textile factories in the East and West.

/cn.j