In the first two weeks of April, cotton prices in Brazil continued to decline and nominally fell to levels last seen in January 2021. The lower export parity value brought on the pressure, the significant seasonally high surplus, and projections for even greater output this year. Despite this, according to the Centre for Advanced Studies on Applied Economics (CEPEA), agents anticipate exports to increase in the following months due to a boost in supply on the local market.
According to Brazil’s National Supply Company (CONAB), 2.554 million tonnes of the crop were expected to be harvested in 2022, and 705 thousand tonnes of cotton were anticipated to be consumed nationally.
According to CEPEA’s most recent fortnightly assessment of the Brazilian cotton market, there is presently a surplus of 1.21 million tonnes to be exported, considering the domestic demand and the 1.2 million tonnes shipped between August 2022 and the first week of April 2023.
Because there wasn’t much demand in Brazil during the first two weeks of April, some vendors lowered their asking prices out of concern that prices would soon decrease further. Sales requirements rise as the new season draws near, either due to a need for cash flow or so farmers can clear warehouse space.
The cotton CEPEA/ESALQ Index fell 8.3% between March 31 and April 14, finishing that day at BRL 4.2719/pound, its lowest nominal level since January 11, 2021.
