Global Vision: The Rise Of Cotton Prices In Brazil Is Boosted By The Tightening Of International Prices And Supply

Affected by the international valuation, the cotton price in Brazil has been rising slightly after falling for four consecutive months. The international valuation increases the export parity, which leads to the seller's unwillingness to reduce the domestic spot price. Farmers have always favored exports, waiting for Brazil to improve. Some of these agents have left the spot market.

In terms of demand, the recent cotton valuation has led many buyers to raise their prices, mainly those who urgently need to replenish their inventory. Due to weak demand in the textile industry chain, buyers have completed sporadic transactions in the past few days, either for timely delivery or to replenish inventory.

During May 15-22, the CEPEA/ESALQ cotton index rose 5.82%, reaching R $4.0843 per pound on Monday.

Despite the recent increase, the average price in May was 3.8579 reais/pound, 5% lower than the export parity, 10.52% lower than that on April 23, and nearly 50% lower than that on May 22. This is also the lowest monthly average level since October 19.

In nominal terms, the monthly average value of the Cotbook A index is currently US $0.9406/pound, the lowest level since May 2011 (US $0.9094/pound). The average price of cotton index (spot) is 0.7743 US dollars/pound, 17.7% lower than the Cotbook A index. Compared with the average contract price of ICE cotton in May of 0.82 US dollars as of May 23, the price in Brazil is 5.6% lower.

Cepea calculation shows that during the period of May 15-22, the export parity of FAS (delivery alongside ship) at Santos Port rose 7.9% to 4.2164 reais/pound (0.8485 dollars/pound) and 4.2269 reais/pound (0.8507 dollars/pound) at Paranagua Port. During this period, the US dollar rose 1.53% against the real to 4.969, and the Cotbook A index rose 6.15% to 0.9750 US dollars/pound, supporting prices.