Domestic prices of cotton in Brazil have oscillated in May, but ended the month with a slight increase.During the month, the CEPEA/ESALQ Index, eight-day payment terms, for cotton type 41-4, delivered in São Paulo, increased 0.52 per cent.

In general, liquidity was low in May. Quotes were underpinned by the firm position of sellers in the off-season period and by the devaluation of the currency against the dollar, mainly in the second fortnight of the month.

In addition to lower cotton availability in the spot market, the gap between asking and bidding prices also contributed to limited trade.

Based on estimates for a good 2016-17 harvesting, some processors expect prices to drop and hence were interested in buying only small volumes to meet their short-term needs.

For the anticipated trade of the new season, the gap between asking and bidding prices has been wide as well.

However, the pace of export trade was faster in May, mainly for shipments in 2018 (2017-18 crop). International price rises, mainly in mid-May, encouraged agents to close new contracts and/or fix prices for open contracts.

Brazilian cotton prices climbed in the first fortnight of January 2017, primarily driven by low availability, coming from the failure of the 2015-16 crop and since most production from that crop was traded in advance.