Brazil News
Domestic prices, weekly news and special reports about the world’s second largest exporter of Cotton
Summary
- Basis FOB Dec’23 for a Middling 36 has managed to increase 50 points since the beginning of the month, but we don’t see this level holding up, taking into consideration carry-over, production forecast and the poor export shipments numbers for the first 6 months of 2023.
- Harvesting in Brazil has started, 35% of 22/23 crop has been harvested.
- EAP forecasts carryover from 22/23 to be at least 550,000 tonnes. 3/4 of that in the hands of merchants.
- EAP forecasts a production of 3.2 million tonnes of cotton lint.
- According to IMEA, 99% of 21/22 crop has been sold. 72% of 22/23 crop is sold, which is 8,37% behind compared to the 5-year average. Finally, 34.59% of the 23/24 crop is sold, which is 8.21% behind the 5-year average. Most of big farmers in Brazil have taken advantage of high basis z24 and have sold over 50% of 24 crop.
- Cotton seed has also been behind schedule. 21/22 sales is 8% behind the 5-year average. For 22/23 season, sales of cotton seed were behind 5-year average as far as 40% until mid-April, where it recovered significantly. 22/23 cotton seed sales is now 23.4% behind 5-year average and 13.52% behind 21/22 during same period.
- Brazilian exports are not are having a good performance. Since its poor performance in December 2022 compared to 5-year average, Brazil has been 44% behind schedule and have to sell on average 200,000 per month for the remaining marketing year to accomplish its export target (more on graph below).
- 2022/23 marketing year exports generated revenues of just over 2,300,000,000 dollars, which is about US$2,055 per tonne. So far the average fixation figure for a Brazilian producer has been US$0.93 cents per pound, including the basis.
- Cotton producers remain concerned about cost of production. According to Imea, the first estimate of cost of production for 23/24 crop shows a decrease of 8.68% in effective operational cost (COE) compared with what was consolidated in the crop 22/23, and was estimated at R$ 16,849/ha. This decrease was influenced mainly by the fall of 28.11% in costs fertilizers costs.
- Domestic consumption is estimated at 625 thousand tons in the 2022/23 season.
Cotton CEPEA/ ESALQ - 8 days credit
Price is based ex warehouse in São Paulo
Source: CEPEA
Brazilian Monthly Export Sales Report
In thousand tonnes.
Source: MDIC
NY CTZ23 vs. CEPEA/ ESALQ - 8 days
Source: Barchart & Cepea
Brazilian Basis
Basis Santos Port from Mato Grosso CTZ23
Source: IMEA
Brazilian Supply & Demand
In Tonnes.
Source: CONAB
Weekly Crop Condition Update
Updated on: 26/06/2023
Harvesting has started, mainly in Bahia and a few places in Mato Grosso. According to a survey carried out by Conab’s field teams, the crops have been developing well with adequate soil humidity, the cultivation treatments are being applied in several regions, and the crops do not present phytosanitary problems.
Source: Conab
Weather Condition for Main Producing Regions
Green: Favourable – Red: High restriction (lack of rain)
Source: Conab
Average FOB Santos Price Since 00
Cost of Production to Farmer
Methodology: The cost of production price varies according to the closing exchange rate of the previous day. Production and costs estimates are retrieved from Conab for Brazil, Mato Grosso and Bahia regions.
U.S Dollar/ Brazilian Real
The Brazilian Real reacted surprisingly well against the Dollar following the presidential election in Brazil, awarding former President Lula to be the next nation’s leader. However, after testing the 200-day moving average on a daily chart, the Dollar gained strength and began the year at R$5,4797 after statements made by Lula which challenges the spending cap, bringing uncertainty to investors. For the first 3 weeks of the year, the Dollar has depreciated more than 5,500 points against the Real and has broken significant support at the 5,0000 level. The test of last day of the month was an important close as the market tested psychological level, weekly and monthly close. A weaker dollar benefits the farmer input purchases but affects sales, as business is made in US$.
Conab Updates
Both weekly and monthly updates are retrieved by Conab.
Imea Updates
Cepea Updates
Brazil Historical
Domestic prices, weekly news and special reports about the world’s second largest exporter of Cotton
Planted Area
In Kg/Ha.
Production
In Kg/Ha.
Productivity
In Kg/Ha.
Cost of Production vs. Soybeans & Corn
Estimates in R$/ha.
Main Importers of Brazilian Cotton
In tonnes.