Brazilian Cotton Prices Experience 2.18% Surge in Mid-February
- Details
- Published: Tuesday, 27 February 2024 11:35
Amidst a volatile mid-February market, cotton prices in Brazil have witnessed a notable surge, settling at BRL 4 per pound. According to the latest report from the Center for Advanced Studies on Applied Economics (CEPEA), the CEPEA/ESALQ Index for cotton recorded a significant 2.18% increase from January 31 to February 15, reaching BRL 4.0745 per pound on February 15.
This surge in prices stands in contrast to the international trend, where cotton values have been steadily climbing, resulting in a widening gap between domestic and overseas quotations and sporadic increases in the local market.
CEPEA's analysis reveals that export parities FAS (Free Alongside Ship) experienced a robust 4.1% surge between January 31 and February 9, reaching BRL 4.1782 per pound ($0.8427 per pound) at the port of Santos (SP) and BRL 4.1888 per pound ($0.8449 per pound) at the port of Paranaguá (PR) on February 9. Meanwhile, the Cotlook A Index witnessed a 3.88% increase during the same period, reaching $0.9685 per pound on February 9. Additionally, the dollar saw a modest 0.22% appreciation against the Real, closing at BRL 4.958 on February 5.
The latest report from the Brazilian National Supply Company CONAB, released on February 8, projects a potential 12.8% expansion in the cotton area for the 2023-24 season, totaling 1.877 million hectares. This projection is accompanied by a 6.10% increase in production compared to the previous month, reaching a historic high of 3.288 million tons.
On a global scale, data from the International Cotton Advisory Committee (ICAC), released on February 1, estimates global cotton production for the 2023-24 season at 24.481 million tons, marking a slight decrease of 0.32% compared to January 2024 data and a 1.46% decline compared to the previous season. However, cotton consumption is expected to remain stable at 23.762 million tons, slightly higher (+0.36%) than the 2022-23 crop, resulting in consumption being 2.94% smaller than the supply.
The fluctuating dynamics of the cotton market underscore the challenges and opportunities facing both domestic and international players, with Brazil's cotton sector navigating through a period of significant price volatility amidst projections of expansion and changes in global supply and demand.