Brazil’s cotton market has seen a boost in liquidity in recent weeks, driven by strong demand from both domestic and international buyers looking to replenish inventories and prepare for year-end needs.
This increase in demand has sparked more trading activity, but despite this surge, cotton prices have remained relatively low. Buyers have been offering lower prices than expected, which has kept the market subdued.
Most sellers, including well-capitalized producers, have been prioritizing the fulfillment of existing contracts, rather than rushing to sell their stocks at current prices.
By early November, a significant portion of Brazil’s cotton production had already been processed, with nearly 77.2% of the harvest completed. This allowed many producers to hold on to their stocks, awaiting more favorable market conditions in the coming months.
Although the trading activity has risen, there is still a disconnect between buyer and seller expectations regarding prices. While demand is solid, the lower-than-expected offers from buyers have resulted in average prices staying low. According to the Centre for Advanced Studies on Applied Economics (CEPEA), the CEPEA/ESALQ Cotton Index saw a slight decrease of 0.66% between October and mid-November, highlighting the persistent pressure on cotton prices.
Brazil’s cotton market remains active with increased liquidity, but low prices continue to dampen the outlook.
Sellers are holding out for better conditions while fulfilling term contracts, which has led to a steady but subdued market. The uncertainty surrounding cotton prices suggests that market participants will be closely watching for changes in demand and market trends in the coming months to gauge future pricing potential.
