Cotton prices increased in Brazil’s domestic market in the first fortnight of December 2017, as both purchasers and sellers retracted from the market, similar to the activity observed in December last year. Between November 30 and December 15, the CEPEA/ESALQ cotton Index rose a staggering 6 per cent, closing at 2.5945 BRL ($0.7848) per pound on December 15.

“Only a few processors and traders were active in the spot market, searching for batches for quick delivery – these agents were flexible regarding asking prices, even for lower quality batches. Most contracts closed involved small volumes to replenish inventories and speed up loading before transportation stops, due to the holiday season,” Center for Advanced Studies on Applied Economics (CEPEA) said in its latest fortnightly report on Brazilian cotton market.

While most growers and trading companies continued being retracted from sales in the domestic market, agents were focused on oscillations of future contracts at the New York Exchange Stock (ICE Futures) and the exchange rate (real x dollar). However, some export contracts were closed, mostly involving the 2017-18 crop.

Meanwhile, the National Company for Food Supply (Conab) has released its third crop survey on December 12. According to the survey, Brazil’s 2017-18 cotton output may reach 1.69 million tons, 10.5 per cent larger than in the previous crop, due to the good perspectives for the Brazilian market. The area sown with cotton is forecast to reach 1.04 million hectares, an increase of 11 per cent; however, average productivity is expected to be 1,622 kilos per hectare, a slight 0.5 per cent down compared to the 2016-17 season.

In Mato Grosso, the largest cotton producing state in Brazil, the 2017-18 harvesting is estimated at 1.06 million tons, 5.2 per cent above the previous one, according to Conab data. The area sown may increase 3.3 per cent, reaching 648,500 hectares, while the average productivity may rise 1.8 per cent, to 1,611 kilos per hectare.

In Bahia, the second largest cotton producing state in Brazil, the 2017-18 production is estimated at 430,200 tons, a staggering 24.3 per cent up compared to the previous season. The increase may come entirely from the larger area sown (34.8 per cent), reaching 201,600 hectares. However, the average productivity may be 1,583 kilos per hectare, 7.8 per cent down compared to the 2016-17 crop. (RKS)