In August, Brazil’s cotton market experienced a significant drop in prices, with rates falling below BRL 4 (~$0.71) per pound. This decline was primarily attributed to a surge in domestic cotton supply, coupled with lower international prices and reduced export parity. As a result, the market witnessed heightened liquidity for prompt-delivery trades, offering more attractive prices to consumers, according to the Centre for Advanced Studies on Applied Economics (CEPEA).
Over the month, the CEPEA/ESALQ cotton index, calculated with payment in eight days, saw a 4.65% decrease, closing at BRL 3.8863 (~$0.69) per pound on August 30. This downward trend reflects the ongoing challenges faced by the Brazilian cotton sector, especially in the context of global market fluctuations.
The 2023-24 cotton harvest in Brazil is proceeding well, with 76.1% of the total area harvested by August 25, according to the National Supply Company (CONAB). Harvesting activities have been completed in Mato Grosso do Sul, and favorable dry and warm weather conditions have supported the progress in Mato Grosso, the country’s largest cotton-producing state. CEPEA highlighted these developments in its latest fortnightly report on the Brazilian cotton market.
In addition to falling prices, Brazil’s cotton exports also witnessed a sharp decline in August. Over the 17 production days, 77.7 thousand tons of cotton were shipped, representing a 53.5% drop compared to the 167.2 thousand tons exported in August 2023. However, the daily export average saw a slight increase of 0.77% to 4.57 thousand tons, compared to 4.54 thousand tons per day in the same month last year, according to the Secretariat of Foreign Trade at the Ministry of Economy (SECEX/ME).
This combination of factors underscores the challenges and complexities facing Brazil’s cotton industry as it navigates both domestic and international market dynamics.
