Global Perspective: Brazil'S Cotton Price Declined More In April

Both the rise in international prices and the appreciation of the US dollar may support Brazil's offer. However, despite the strength of the US dollar in the past few days, foreign futures contracts have languished. Therefore, the seller and buyer in Brazil failed to reach an agreement on the price, resulting in low liquidity.

As for demand, agents of cotton processors reported that the sales of finished products were very low, mainly due to the current global economic situation. Therefore, there are only sporadic purchases, only for replenishing inventory or immediate use. In general, the agents believe that the quotation will continue to decline as new works enter the market.

Although the cotton price has been weak, the agents are now accepting the products they bought at a higher price, which explains their cautious attitude when reaching new transactions in the spot market.

Sellers are worried about the continuous decline of cotton. This situation has led some farmers to withdraw their supply from the market. The demand for warehouses and the expectation of higher production in 2022/23 will also affect the quotation.

The cotton CEPEA/ESALQ index fell 1.72% from April 17 to 24, and closed at R $4.1680/lb on April 24, the lowest nominal level since January 8, 2021 (R $4.1260/lb). At present, the cotton monthly average index is 4% higher than the export parity.

In the international market, the US dollar rose 2.13% against the real from April 17-24, and closed at 5.04 real on April 24. The Cotbook A index has fallen 3.67% in the past seven days, with 24 daily reports of USD 0.9330/pound. Therefore, on April 24, the export parity of FAS (delivery alongside ship) at Santos Port fell by 1.6% to R $4.0899/pound, and that at Paranagua Port fell to R $4.1005/pound.