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Brazilian cotton sales showed a gradual upward trend in January

2023-04-04 10:59

Brazilian cotton sales showed a gradual upward trend in January 2023. The agent stated that the difficulty in matching product prices and quality has affected the liquidity of the spot market. In this case, the cotton spot index in January remained around 5.3 reais per pound. We can see that the sales of Brazilian cotton showed a gradual rebound trend in January this year, which also brings many expectations for the future development of the cotton industry.

In terms of demand, the main job of traders is to complete contracts, and some buyers are looking for higher quality cotton, some of whom are willing to pay higher prices to meet specific requirements. The Center for Advanced Research in Applied Economics (CEPEA), headquartered in S ã o Paulo, emphasized in its latest report on the Brazilian cotton market that due to the low demand throughout the textile chain, it is difficult to pass on the increase in cotton prices to finished products, so agents have reduced their purchases. Cotton farmers with abundant funds are unwilling to lower the asking price, and the seller is only willing to lower the quotation for lower quality cotton. Some of them have decided to wait for better trading opportunities for high-quality cotton.

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From December 29, 2022 to January 31, 2023, the Brazilian cotton spot index rose 0.14% to 5.2561 reais per pound. The average value of the index in January 2023 (R $5.3362) increased by 0.3% compared to the previous month, but its actual value decreased by 23.9% year-on-year. Nevertheless, in January, the average domestic price in Brazil was 17.7% higher than the export price. The early trading of 2021/22 cotton for Far Month delivery ended in late January 2023. In terms of exports, agents use ICE futures contracts to determine prices. Cotton is currently and will be sold in the next two years.

According to data from the Brazilian Cotton Growers Association ABRAPA, as of January 26, 57.31% of Brazil's cotton planting in 2022/23 has been completed. According to data released by Cotton Outlook on January 27th, world cotton production in 2022/23 decreased by 0.14% to 24.862 million tons, a decrease of 0.7% from the previous year. Brazil's cotton production is expected to increase by 13.5% compared to the previous year, but has decreased by 0.9% compared to the forecast in December 2022.

In the first 11 months of 2022, Brazil exported cotton worth $3.342 billion. China is the largest buyer of Brazilian cotton, accounting for 28.81% of Brazil's cotton exports, reaching $9630.4 million. In 2022, Brazil's total cotton exports increased while the quantity decreased. The export value of goods shipped to China increased by 23.84% compared to the same period last year, which was 777.66 million US dollars.

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