Cotton prices in Brazil remain firm in first fortnight of February

Cotton prices in Brazil remain firm in first fortnight of February




Underpinned by price rises abroad, which raised the export parity, and low supply in the national spot market, the prices of cotton remained firm in Brazil during the first fortnight of February. Between January 31 and February 15, the CEPEA/ESALQ Index for cotton rose marginally by 0.57 per cent, closing at BRL 7.0221/pound on February 15.

During the fortnight, sellers had no urgent needs for cash flow, and farmers were focused on the good sowing performance and the development of the crops from the new season, the Center for Advanced Studies on Applied Economics (CEPEA) said in its latest fortnightly report on the Brazilian cotton market.

“In general, domestic liquidity was low, which also reflected the unwillingness of purchasers to pay higher prices for cotton, claiming difficulties to pass on the valuations of raw material to by-products,” the report said.

Underpinned by price rises abroad, which raised the export parity, and low supply in the national spot market, the prices of cotton remained firm in Brazil during the first fortnight of February. Between January 31 and February 15, the CEPEA/ESALQ Index for cotton rose marginally by 0.57 per cent, closing at BRL 7.0221/pound on February 15.

Meanwhile, data from the IBGE (Brazilian Institute of Geography and Statistics) show that the performance of the textile industrial sector in 2021 was higher than that in 2020, but activities slowed down in the last four months of the year. In 2021, the performance of the ‘Preparation and spinning of textile fibres’ sector grew by 5.8 per cent compared to the growth in 2020. However, in December 2021, the performance of this sector was 30.8 per cent lower than that in December 2020.

Likewise, the performance of ‘Manufacture of textile products’ and ‘Manufacture of wearing apparel and accessories’ sectors improved by 8.5 per cent and 10.9 per cent respectively in 2021 over 2020. However, the sectors performance was 27 per cent and 29.5 per cent lower in December 2021 compared to that in December 2020.

In terms of external trade, in January 2022, Brazil exported 199,400 tons of cotton, 26.3 per cent less than that in December 2021 and 27.2 per cent down from that in January 2021, according to Secex (the Foreign Trade Secretariat).

The revenue from exports in January totalled $380.6 million, down 21.9 per cent month-on-month and 10.5 per cent year-on-year. In real (Brazilian currency), revenue surpassed BRL 2.1 billion, considering the average dollar value in January 2022 at BRL 5.5258.

Last month, the average export value was $0.8660/pound (BRL 4.7854/pound), up 3.5 per cent over December 2021 and 26.9 per cent above that in January 2021. In real, revenue was 29.8 per cent lower than that in the national spot market.

A report released by the International Cotton Advisory Committee (ICAC) on February 1 estimated Brazil’s cotton output for the 2021-22 season at 2.71 million tons, up 14.83 per cent compared to the previous season. Brazil’s cotton export is forecast to reach 2.1 million tons, down 12.50 per cent compared to the earlier season.

Fibre2Fashion News Desk (RKS)





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