Following the first Pepro (Equalization Premium Paid to the Producer and/or Cooperative) auction which took place on September 25, stakeholders in the Brazilian cotton market are acting carefully in signing new trades.
Brazilian cotton sellers expect that, due to government support, prices might be stable or register increases. Purchasers on the other hand are refraining from committing new purchases due to high supply this season and global price drops and are awaiting further cotton price declines.
The CEPEA/ESALQ Index for cotton type 41-4 closed at 1.6716 BRL or USD 0.6822 per pound on September 30, dropping 2.51% in September. It is important to highlight that many agents still complain about the low quality of the product from this crop, CEPEA said.
In the Pepro auction, 498,000 tons or 99.4% of the 501,000 tons available in the auction was traded. São Paulo has not purchased the 3,000 tons offered by the government, which might be attributed to the fact that trades in this state are at an advanced stage, due to the early harvesting.
The International Cotton Advisory Committee’s report on September 23 indicated a global production increase in the 2014/15 season totalling to 26.22 million tons. Global stocks and consumption were revised downwards, to 21.44 million tons and 24.4 million, respectively.
In the week ending Sept 26, Cotlook A Index dropped 4.48%, when compared to the previous week ending Sept 19. In the week ending Sept 26, the dollar average picked up 2.23%.
The export parity calculated by Cepea FAS (Free Alongside Ship) Paranaguá port averaged 1.4508 BRL per pound, down 2.45% compared to its previous week. (AR)
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