The expected larger output this season has led to a drop in quotes of cotton prices in the Brazilian market in August, Center for Advanced Studies on Applied Economics (CEPEA) said in its latest fortnightly report on the Brazilian market. Sellers were willing to lower asking prices, since most batches supplied did not have homogeneous quality.

From July 31 to August 31, the CEPEA/ESALQ cotton Index, with payment in 8 days, decreased 4.2 per cent, closing at 3.1895 BRL per pound on August 31, the lowest level since April 16, when it closed at 3.1845 BRL. The Index average last month, at 3.2458 BRL per pound, was 5.1 per cent lower than in July 2018.

Aware of a larger output in Brazil and expecting new price drops, processors pressed down quotes when active in the market. “In this scenario, trades in the spot market only involved small volumes. Agents were focused on shipment of the product previously purchased, for both the domestic market and exportation. Traders, in turn, claimed difficulties to match price and quality in new trades, but purchased cotton to accomplish contracts,” CEPEA said in its report.

Meanwhile, growers were focused on the harvesting and processing of the 2017-18 season and scheduled deliveries.

Until August 24, around 76.14 per cent of the total area under cotton was harvested in Mato Grosso, the main cotton producing province in Brazil, according to Instituto Matogrossense de Economia Agropecuária (IMEA). (RKS)