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Brazilian cotton prices escalate in second half of July

After declining in the first fortnight of July, the prices of Brazilian cotton started regaining lost ground and started its upward march in the second fortnight of July.

Although harvesting of the 2015/16 crop was steady and firm, the availability of cotton in the spot market fell in mid-July. This factor pushed the cotton prices upwards.

‘Keeping an eye on international price rises, Brazilian cotton sellers pushed for quicker deliveries in the domestic market, leading to a quickening of pace in cotton trades,’ the Center for Advanced Studies on Applied Economics (CEPEA) said in a report.

Although textile mills were slower in purchasing cotton in late July, Brazilian traders ensured higher liquidity and stability to prices.

In the second fortnight of July, traders searched for batches to accomplish contracts for prompt-delivery, while processors were cautious about buying new batches, concerned with the prices.
Brazilian cotton growers continued harvesting and processing cotton from the new crop but a lack of rains in some producing regions, resulted in a production break, a scenario that concerned growers.

Between June 30 and July 29, the CEPEA/ Escola Superior de Agricultura Luiz de Queiroz (ESALQ) Index cotton type 41-4 delivered in São Paulo with payment in 8 days dropped 1 per cent, closing at BRL 2.63 or $0.8123 per pound on July 29.

 
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