Insights

• Brazilian cotton prices hit their lowest real level since 2009 in October due to record domestic supply, subdued global demand, weaker international prices and a lower dollar parity effect.
• Limited spot trading occurred as agents focused on existing contracts and producers on new grain crops.
• The CEPEA/ESALQ Index fell 4.63 per cent in October.

Cotton prices in Brazil continued their downward trend, reaching in October their lowest real-term level since October 2009, according to CEPEA/ESALQ. The decline is being driven by record domestic supply, weak consumption both locally and globally, lower dollar values, and reduced international quotations, which have narrowed export parity, as per the Centre for Advanced Studies on Applied Economics (CEPEA).

Spot market activity remained limited, with trades mostly aimed at meeting immediate needs or supporting cash flow. Many market participants stayed focused on fulfilling existing term contracts, while producers concentrated on new grains crop activities. However, transactions for 2024-25 and 2025-26 cotton saw steady movement during the month, CEPEA said in its latest fortnightly report on the Brazilian cotton market.

The CEPEA/ESALQ Index (payment in 8 days) fell 4.63 per cent in October, averaging BRL 3.5176 (~$0.66) per pound, down 5.16 per cent month-on-month and 12.7 per cent year-on-year. Export parity FAS rose 0.7 per cent in the period, reaching BRL 3.6129 per pound at Santos and BRL 3.6234 per pound at Paranaguá on October 31. The Cotlook A Index edged down 0.39 per cent to $0.7740 per pound, while the US dollar gained 1.07 per cent against the Real, closing the month at BRL 5.381.

Global cotton area for 2025-26 is projected at 30.42 million hectares, down 0.64 per cent year-on-year, according to ICAC. Slightly higher yields are expected to keep world output stable at around 25.4 million tonnes. Global consumption is forecast to decline 1.52 per cent from last month’s estimate, reaching 25.01 million tonnes.

In Brazil, cotton area in 2025-26 is expected to rise 11.46 per cent, offsetting an estimated 4.92 per cent decline in productivity. This would result in output of around 3.921 million tonnes, an increase of 5.97 per cent compared to 2024-25.