Reduced supply in Brazil’s spot cotton market kept prices relatively flat in the first half of June, according to a report from Center for Advanced Studies on Applied Economics, or CEPEA.
The report said that despite interest in new acquisitions, processors generally didn’t do much purchasing for quick-delivery due to low quality of the available batches.
With the beginning of the 2016-17 harvesting season, cotton stock from the 2015-16 crop remained concentrated with a few agents who kept firm on asking prices.
In this context, cotton prices oscillated in the market in that period, CEPEA reported. From May 31 to June 14, the CEPEA/ESALQ Index, eight-day payment terms for cotton type 41-4, delivered in São Paulo, increased 0.45% closing at 2.79 Brazilian real (85 cents) per pound on June 14.
In the U.S., the Department of Agriculture’s weekly report showed spot quotations averaged 71.38 cents per pound for the week ending Thursday. This was the lowest weekly average since Jan. 19, when the average was 70.92 cents per pound. The weekly average was down from 73.54 cents the previous week, but up from 61.96 cents a year earlier.
In Brazil, considered the world’s fifth largest cotton producer, agents were focused on trades involving the 2016-17 crop, mainly for domestic shipment in the coming months.
According to data from Conab, Brazil’s National Supply Bureau, the Brazilian cotton production in the 2016-17 crop could increase 15.4%, reaching 1.49 million tons. The boost is due to expectations for a 17.4% in productivity.
This month’s USDA report featured increases to forecasts for both global production and mill-use in the 2017-18 crop year. The projection for the world harvest was lifted 1.5 million bales to 114.7 million. The projection for world mill-use was lifted 760,000 bales to 116.5 million.
The USDA’s predictions for global cotton trade was revised downward to 36.8 million bales from 37.6 million, driven by higher production forecasts for importing countries. Export projections were lowered for the U.S., India and Brazil.