Brazil’s cotton market recorded stronger activity in February 2018 as fluctuations in international cotton prices and the exchange rate between the US dollar and Brazilian real supported higher domestic prices. After a slow start to the month due to the Carnival holiday and the completion of new crop planting, trading activity accelerated in the second half of February.
According to the CEPEA/ESALQ Cotton Price Index, domestic cotton prices increased by 3.2% between January 31 and February 28, closing at BRL 2.8417 per pound at the end of the month.
Domestic Trading Gains Momentum
Liquidity improved during the second half of February as textile processors sought to rebuild inventories. Buyers focused on high-quality cotton but generally offered prices below sellers’ expectations. Although producers remained firm on pricing, many agreed to extend payment terms, allowing traders to supply the spot market and satisfy part of the growing demand.
The forward market was also active, with contracts signed for deliveries during the first half of the year using cotton from the 2016–17 crop, alongside agreements covering the 2017–18 and 2018–19 harvests. Transactions were concluded using both fixed prices and pricing mechanisms linked to the CEPEA/ESALQ Index or ICE Futures contracts.
By February 20, approximately 69.8% of Brazil’s 2016–17 cotton crop had been sold, according to the Brazilian Commodity Exchange (BBM). Of the total sold, 59.6% was destined for the domestic market, while 40.4% was allocated for export.
Export performance also remained strong. Data from Brazil’s Secretariat of Foreign Trade (SECEX) showed that the country exported approximately 780,000 tonnes of cotton between August 2017 and February 2018. Meanwhile, 701,000 tonnes from the 2017–18 crop had already been contracted, with 62.8% intended for international markets and 37.2% for domestic buyers.
