The prices paid for Brazilian cotton in export markets – represented by export parity – remained more attractive than prices in the domestic spot market in the first fortnight of November. As a result, sellers were unwilling to lower their asking prices while buyers agreed to pay more, resulting in prices going up, majorly for higher-quality cotton.
On November 8, the CEPEA/ESALQ Index for cotton set a nominal record in the series of CEPEA – which began in July 1996 – closing at BRL 6.0642/pound. On November 16, this Index closed at BRL 6.0330/pound, 1.43 per cent up in the fortnight.
“The average in the first half of November, which closed at BRL 6.0251/pound, is the highest in the series, but still 1.6 per cent lower than the export parity. It is important to mention that this Index remained higher than the export parity for 12 consecutive months,” the Center for Advanced Studies on Applied Economics (CEPEA) said in its latest fortnightly report on the Brazilian cotton m market.
Although the US dollar dropped by 2.7 per cent against the real between October 29 and November 16, to BRL 5.492 on the 16th, the Cotlook A Index rose by 5.8 per cent, to USD 1.2695/pound. Thus, the export parity increased by 2.95 per cent, to BRL 6.1046/pound (USD 1.1115/pound) at the port of Santos (SP) and BRL 6.1151/pound (USD 1.1135/pound) at the port of Paranaguá (PR).
Meanwhile, according to data from the Secex, the secretariat of foreign trade, Brazil exported 203,090 tons of cotton in October 2021, the highest volume since March 2021 when it exported 222,130 tons. The figure for October is 44.8 per cent more compared to the previous month and 15.8 per cent down from that in October 2020.
The average price per pound closed at $0.7783, 1.22 per cent higher in the monthly comparison and 13.65 per cent higher in the annual comparison. Considering the average of the US dollar in October, of BRL 5.535, in real, the price of the cotton exported closed at BRL 4.3081/pound, 27.1 per cent lower than the Brazilian cotton Index (BRL 5.9088/pound) and 23.86 per cent below the export parity last month (BRL 5.6583/pound).
Source: https://www.fibre2fashion.com/