The uncertain global economy has led to reduced liquidity and lower prices for agricultural commodities in March, with cotton being particularly vulnerable to inflation and income issues. In Brazil, Center for Advanced Studies on Applied Economics (CEPEA) collaborators reported difficulties in selling cotton products, resulting in even steeper price drops for the raw material.

As sales of finished cotton products face challenges, cotton processors purchased only small volumes of the material, aiming to meet urgent demands or replenish inventories. These buyers offered lower prices for cotton, CEPEA said in its latest fortnightly report on the Brazilian cotton market.

In terms of sellers, the approaching 2022-23 cotton harvest and the need for cash flow among some farmers increased the supply of cotton in the national spot market. In these cases, farmers were more willing to lower their asking prices, particularly when the quality was not as high. However, some farmers remained firm and unwilling to negotiate, primarily when the quality was high, and the supply was low.

Between February 28 and March 31, the CEPEA/ESALQ Index for cotton experienced a 10 per cent decrease, closing at BRL 4.6572/pound on March 31.

Fibre2Fashion News Desk (KD)

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Uncertain global economy increases pressure on Brazil's cotton prices

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