In the Brazilian market, cotton prices continued to fall in the first fortnight of April, reaching the level from January 2021 in nominal terms. The pressure came from the lower export parity value, high surplus from last season, and expectations for even higher output this year. Despite this, agents expect exports to rise in the coming months with the increase in supply in the domestic market, as per the Center for Advanced Studies on Applied Economics (CEPEA).

Brazil’s National Supply Company (CONAB) estimated that the crop harvested in 2022 was 2.554 million tons, with national cotton consumption forecast at 705 thousand tons. There is currently a surplus of 1.21 million tons to be exported considering the domestic demand and the 1.2 million tons exported between August 2022 and the first week of April 2023, CEPEA said in its latest fortnightly report on the Brazilian cotton market.

Demand in Brazil was weak in the first fortnight of April, leading some sellers to lower asking prices, fearing a further drop in quotations soon. As the new season approaches, sales needs increase, either because of cash flow needs or for farmers to make room in warehouses.

Between March 31 and April 14, the CEPEA/ESALQ Index for cotton dropped by 8.3 per cent, closing at BRL 4.2719/pound on April 14, the lowest nominal level since January 11, 2021. Despite this, the market is expected to recover in the near future, with the increase in supply in the domestic market and the rise in exports, the report added.

Fibre2Fashion News Desk (KD)

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