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The strong retraction of the dollar against the real continues to put pressure on the domestic cotton market. In the CIF average of the São Paulo textile industry cluster, the feather closed on Thursday (24) quoted at R$ 4.72 per pound, falling 1.76% in relation to the previous day and at the lowest level since the 11th of February. Compared to the same period last month, it accumulated losses of 6.98%. Compared to the same period last year, earnings were still 72.9%.
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“Compared to the total cost of production, current prices guarantee margins close to 25% in the main producing regions”, assesses SAFRAS & Mercado analyst, Élcio Bento. “This margin is still attractive, but it has already reached 40%, when the plume operated at its maximum levels of the season”, he ponders.
In FOB export from the port of Santos, the indication was 94.73 cents per pound (c/lb) on the 24th, a drop of 0.96% compared to the previous day. “This price makes the Brazilian product 10.1% more expensive than the North American product (spot contract) negotiated in New York”, recalls Bento. The previous day, this difference was 9.6. A week ago, from 9.7%. And, a month ago, 13.6%.
The 2021/22 Harvest Plan, released this Tuesday, did not bring anything very specific that directly affects cotton. “Cotton producers are large and the plan focuses much more on small ones”, emphasizes the analyst.
“The main point that draws attention, negatively, is the rise in interest rates”, highlights Bento. “However, the Selic, a reference for interest rates in the country, rose. So, this adjustment was necessary”, he explains.
According to the analyst, in relation to the R$ 1.4 billion released to aid marketing, it appears that it will not be used by cotton producers. “There is no indication that prices will reach levels below the minimum levels established by the government”, he highlights. “In general terms, the plan was as expected and did not bring any major news”, he concludes.
By: Rodrigo Ramos | Crops & Market
