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Due to lower production and firm demand, prices hit nominal record

 

Cepea, January 3, 2022 – Cotton prices have been in an upward trend since mid-2020, and, in 2021, they hit the highest nominal levels of Cepea series. Increases are linked to higher international values, high dollar levels against Real and to the increase of the export parity, which also hit a record in the year, in a scenario of lower domestic production and firm international demand. Moreover, the high share of the production already traded through contracts to export reduced the availability in the spot market.

 

From December 30, 2020 to December 27, 2021, the export parity moved up 48%, boosted by the 8.68% dollar increase against Real and the Cotlook A Index, which rose by 47% in the same period. In the partial of 2021, the first contract at ICE Futures upped 44%.

 

As a result, after upping 42% in 2020, the CEPEA/ESALQ Index for cotton soared 68.2% in 2021, closing at BRL 6.4085/pound on December 27. In the first two months of 2021 alone, the increase surpassed 30%.

 

The Index average in this partial of December (up to Dec. 27), is BRL 6.3537/pound, a record in nominal terms. In real terms (IGP-DI November/21), the average price in December is the highest since April/11, when it was BRL 8.3193/pound.

 

2020/21 CROP ESTIMATES – Conab data indicate that the planted area decreased by 17.7% in the 2020/21 season compared to the previous, totaling 1.37 million hectares. Moreover, due to the 4.5% productivity decrease (1,721 kg/hectare), the production dropped 21.4%, at 2.36 million tons.

 

EXPORTS – According to data from Secex, from January to the fourth week of December, Brazil shipped 1.94 million tons, 9% less compared to the record registered in 2020.

 

(Cepea-Brazil)

 

 

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