Brazil's cotton market faces slump amid pricing disputes

Intermittently, a limited number of batches were released onto the market to fulfil urgent requirements or to allow buyers to restock their inventories. A number of farmers resisted dropping their asking prices, particularly for high-quality cotton. Sellers with cash flow needs, or those needing to clear warehouse space due to the imminent arrival of larger volumes of new crop cotton, demonstrated more flexibility in lowering prices.

Industrial agents exerted downward pressure on prices, while others refrained from market participation, relying instead on their stored products or those already purchased and scheduled for delivery. As a result, some processors operated at reduced capacity, CEPEA said in its latest fortnightly report on the Brazilian cotton market.

From May 31 to June 15, the CEPEA/ESALQ Index for cotton fell by 2.9 per cent, settling at BRL 3.9924/pound on June 15.

In a report released on June 13, CONAB (Brazil's National Company for Food Supply) projected the Brazilian cotton area for the 2022-23 crop season at 1.636 million hectares, a 2.2 per cent increase compared to the 2021-22 season. Productivity estimates were also adjusted upwards for another month, by 2.69 per cent compared to the previous forecast, and 14.1 per cent compared to the last season, at 1,821 kg/hectare. Consequently, the projected cotton harvest volume in Brazil could reach 2.978 million tons, the second highest ever, marking a 2.66 per cent increase from the previous month and a 16.6 per cent increase from the 2021-22 season.

According to a USDA report published on June 9, Brazil is expected to import 2.014 million tons of cotton in the current season. This represents the highest volume since the 2020-21 crop, a 6.3 per cent increase compared to last month's forecast, and an impressive 42.3 per cent rise from the 2022-23 season.

ALCHEMPro News Desk (KD)