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Cepea, January 3rd, 2024 – The cotton production hit a record in the 2022/23 season in Brazil, due to increases of both area and productivity. The global supply also moved up. The demand, however, did not follow the increase of the availability, since unfavorable economic conditions pushed players away from trades, limiting sales of manufactured goods. The higher supply compared to the demand boosted inventories, pressing down both domestic and international cotton prices.
In Brazil, from January to May, despite the offseason period, prices dropped significantly, influenced by expectations of a good crop and the weak demand. Due to the higher surplus, exports would have to register a good performance in 2022/23, but anticipated trades were moving at a slow pace in early 2023, since prices were not considered attractive by sellers.
Between May and June, monthly averages were firm, but prices were at the lowest level of the year in July. In the following months, monthly averages oscillated less, underpinned by exports, which helped to reduce the domestic surplus. Logistical issues and higher transportation costs were also observed in 2023, as well as discrepancies on the quality of the product, which limited trades.
In 2023, the CEPEA/ESALQ Index for cotton dropped 24.4%, closing at BRL 4.0230/pound on December 26. Between December 29, 2022 and December 26, 2023, the export parity moved down 19.4%, influenced by the 11.5% decrease of the Cotlook A Index and the 8.6% devaluation of dollar quotes against Real.
2022/23 CROP IN BRAZIL – According to Conab, the 2022/23 area rose 4% in relation to the previous, totaling 1.664 million hectares. The productivity was estimated at 1,907 kilos per hectare, 19.5% up compared to the season before and a record. The 2022/23 production was projected at 3.173 million tons of cotton, for an increase of 24.2% against the previous and the highest in history.
USDA – The 2022/23 global production upped 1.8% compared to 2021/22, totaling 25.395 million tons and sustained by the higher supply in China, India and Brazil. The United States and Pakistan registered significant decreases in the same period.
(Cepea-Brazil)
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Fonte: Cepea