International news:Brazilian cotton sales show gradual recovery in January

Brazilian cotton sales showed a gradual upturn in January 2023. Agents said that difficulties in matching product price and quality affected liquidity in the spot market. In this context, the cotton spot index remained at around R$5.3/lb in January.
 

 

On the demand side, the main work for traders was the completion of contracts and some buyers were looking for higher quality cotton, some of them willing to pay higher prices to meet specific requirements. In its latest report on the Brazilian cotton market, the São Paulo-based Centre for Advanced Studies in Applied Economics (CEPEA) highlighted that agents had reduced their purchases as demand across the textile chain was low and it was difficult to pass on higher cotton prices to finished products. Well-funded cotton farmers were reluctant to lower their asking prices and sellers were only willing to lower their offers for lower quality cotton, with some of them deciding to wait for better trading opportunities for higher quality cotton.

 

The Brazilian cotton spot index rose by 0.14% to R$5.2561/lb between 29 December 2022 and 31 January 2023. the average value of the index in January 2023 (R$5.3362) was 0.3% higher than the previous month on a year-on-year basis, but its actual value was 23.9% lower year-on-year. Nevertheless, Brazilian domestic prices were on average 17.7% higher than export prices in January. Early trading in 2021/22 cotton for delivery in the far months ends in late January 2023. For exports, agents use ICE futures contracts to set prices. Cotton is available for sale for both the current and future years.

 

According to ABRAPA, the Brazilian cotton growers' association, 57.31% of Brazil's 2022/23 cotton sowing was completed as of 26 January. World cotton production in 2022/23 fell 0.14 per cent to 24.862 million tonnes, down 0.7 per cent from the previous year, according to data released by Cotton Outlook on 27 January. Brazilian cotton production is expected to increase by 13.5 per cent from the previous year, but has been revised down by 0.9 per cent from the December 2022 forecast.

 

In the first 11 months of 2022, Brazil exported $3.342 billion worth of cotton. China was the largest buyer of Brazilian cotton, accounting for 28.81% of Brazil's cotton exports at US$963.04 million. 2022 saw an increase in total cotton exports and a decrease in volume. Exports of goods destined for China increased by 23.84% compared to US$777.66 million in the same period last year.