Brazilian cotton pricessurge by almost 10pc due to firm demand in April

Brazilian cotton prices in April 2016 increased by nearly ten percent due to firm demand, decrease in supply from important cotton growing countries like India, and China’s possible interest for imports. However, the volume of cotton already traded this season is little less than the volume sold in the same period last year.

The CEPEA/ESALQ Index, with payment in 8 days, for cotton type 41-4, delivered in São Paulo rose 9.66 per cent to 2.6680 BRL ($0.777) per pound on April 29.

The good performance of Brazilian cotton exports in the last few months and the lower output in the 2015 crop has resulted in reduced domestic stock, Cepea, the Sao Paulo University linked research centre, said in its latest market analysis.

Cepea said that considering the ending stocks of 348,900 tons in December 2015, as per data from the National Company for Food Supply, Conab, and exports estimated at 293,000 tons in 2016, only 55,900 tons would be available for the domestic market this year.

This means a deficit of around 150,000 tons or a decrease of 60 percent in domestic consumption.

Moreover, this season the area under cotton cultivation is lower than the previous one. Further, the low volume of rainfall might hamper productivity. This might result in an even lower supply of cotton than the current estimate.

As a result, Brazilian sellers were not very ardent in April, as they counted on even more increase in prices in the following weeks and months.