BRASÍLIA: A decline in global cotton quotes in August 2016, led to heightened trading activity in the Brazilian cotton market, which too resulted in drop in Brazilian domestic cotton prices. Despite this, the average Brazilian cotton price was 15.5 per cent higher than export parity, which made sales in the domestic market more attractive than exports.
So, while trading companies made cotton available in the Brazilian market, most cotton growers were focused on accomplishing previous contracts. Growers also kept an eye on the failure of the cotton crop and also low quality of the first crop arrivals. Between July 29 and August 31, the CEPEA/ESALQ Index, for payment in 8 days, for cotton type 41-4, delivered in São Paulo, dropped 6.67 per cent, closing at BRL 2.4564 or $0.762 per pound on August 31.
According to a calculation done by CEPEA on data from the Brazilian Commodity Exchange (BBM), 73.5 per cent of the 2014/15 crop, projected at 1.563 million tons, had already been traded till August. Of this, 50.7 per cent was sold in the domestic market and the rest in the international market. With regards to the 2015/16 crop, estimated at 1.348 million tons, 53.5 per cent is projected to have been traded till August. Again, of this volume, 40.9 per cent was sold in the local market and the rest was exported.
