Brazil's cotton prices decline amid rising production.

Amid ongoing harvesting and processing activities, market participants are prioritizing term contracts secured at more favorable rates than current spot market prices, according to the Center for Advanced Studies on Applied Economics (CEPEA) of the University of Sao Paulo.

From July 31 to August 15, the CEPEA/ESALQ cotton index with eight-day payment terms fell by 1.37 per cent, closing at BRL 4.0197 per pound. Export parity prices (FAS) also dropped by 4.9 per cent, with prices at the ports of Santos and Paranagua reaching BRL 3.7602 and BRL 3.7708 per pound, respectively.

The Cotlook A Index, representing Far East deliveries, decreased 0.82 per cent, now at $0.7870 per pound. During this period, the Brazilian Real depreciated by 4.05 per cent against the US dollar, closing at BRL 5.503.

On the production front, Brazil’s cotton planting area for 2023-24 is projected to rise by 16.9 per cent to 1.944 million hectares, though productivity is expected to decline by 1.7 per cent. Overall, cotton production is anticipated to grow by 14.8 per cent to 3.644 million tonnes.