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Brazilian cotton index drops 4.96% in March

The CEPEA/ESALQ Index for cotton in Brazil dropped by 4.96 per cent for the month from February 26 to March 31, closing at 4.8088 BRL/pound on March 31, according to the Center for Advanced Studies on Applied Economics (CEPEA). However, the monthly average for the Index closed at 5.0055 BRL/pound, 4.5 per cent higher than that in February.

During the month, the Brazilian cotton market saw two distinct moments. In the initial days of the month, prices continued to rise—a trend that was observed in January and in February. This was because of a boost in demand, firm stance of sellers concerning prices, and low supply in the domestic spot market.

Thus, the CEPEA/ESALQ Index for cotton hit 5.2251 BRL/pound on March 4, a record since CEPEA began tracking prices in 1996.

In the later part of the month, however, high prices, uncertainties related to the increase in the number of covid-19 cases in the country, and the consequent increase in the restrictive measures to fight the pandemic drove agents away from the Brazilian spot market.

As a result, supply surpassed demand, and prices began to decrease. “In general, only small volumes were purchased sporadically, also because agents were opting for working with the cotton stocked and/or being delivered (previously purchased),” CEPEA said in its latest fortnightly report on the Brazilian cotton market.

“As regards sellers, only the farmers with higher needs were willing to lower asking prices. It is worth to highlight that most cotton farmers in Brazil have made cash flow and that a large volume of the coming crop has been sold,” the report added.

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