Brazilian Cotton Prices Decline in Mid-July Amid Weak Domestic Demand
2026-07-23 13:47:07
Brazilian Cotton Prices Decline in Mid-July Despite Improved Export Parity
Cotton prices in the Brazilian market saw a decline in mid-July. Although export parity improved during this period—narrowing the gap between domestic and export prices—sluggish buying by the domestic textile industry and concerns regarding the quality of available cotton stocks kept the spot market under pressure. Consequently, prices softened.
According to the Center for Advanced Studies on Applied Economics (CEPEA) at the University of São Paulo, buyers faced difficulties accepting the quality of certain cotton batches. Meanwhile, weak sales of finished textile products led mills to adopt a cautious approach toward new purchases. Due to subdued demand, some buyers offered lower prices, placing additional pressure on the spot market.
In the meantime, cotton producers focused on harvesting and fulfilling previously agreed-upon forward contracts. Some producers were keen to sell remaining stocks from the 2024/25 season, while others held firm on their asking prices. This dynamic maintained a balance between market availability and buying interest, resulting in limited spot trading activity.
Brazil's National Supply Company (Conab) has raised its cotton production forecast for the 2025/26 season to 4.06 million tonnes. This represents a 2.05 percent increase over the previous estimate, though it is 0.5 percent lower than the production forecast for the 2024/25 season. The average yield is projected at 2,011 kilograms per hectare, with the cotton cultivation area expected to be 2.02 million hectares—a year-on-year decline of 3.2 percent.
Separately, according to the US Department of Agriculture's (USDA) July report, global cotton production for the 2026/27 season is projected at 25.53 million tonnes. This is 1 percent higher than the previous estimate but 3.8 percent lower compared to the 2025/26 season. The report raises production estimates for both Brazil and the US by approximately 3 percent. However, production in both countries is projected to remain below the levels seen in the previous season.
