Cotton prices kept skyrocketing in February (Brazil)

Cotton quotes went through the roof once again in February. In Brazil, the CEPEA/ESALQ Index for cotton type 41-4 (delivered in São Paulo city, payment in 8 days) is next to 4 reais (2.4 dollars) per pound. Brazilian producers were taking advantage of the current scenario by dictating the market, due to the limited supply. It is worth noting that cotton growers were not in need of cash flow in late February.

Purchasers seemed to have reached limits, preferring to postpone acquisitions and, in some cases, they were running their production at idle. They faced difficulties to transfer costs to manufactured products. Some companies have reduced purchases in more than 50%, due to the low supply.

In the accumulated of February, the CEPEA/ESALQ Index for cotton type 41-4 (delivered in São Paulo city, payment in 8 days) soared 11.25%, closing at 3.9861 reais or 2.3969 dollars per pound on Feb. 28.

In the international market, political and economic instabilities in the Middle East and in the North of Africa have concerned agents regarding the impacts on international trades in the end of the month. In spite of this scenario, prices increased in Brazil, mainly because of the firm position of producers.

Center for Advanced Studies on Applied Economics (CEPEA) is a research center of the University of São Paulo located at ESALQ in Piracicaba, State of São Paulo. It is focused on agribusiness issues considering a diversity of related subjects: market analysis and price discovery, international trade, macroeconomics, management strategies, environmental and social aspects, entrepreneurship and family farming.