Interviews
Merchant & export buying holds cotton market up
14 Apr '07
3 min read
The reduction in consumption brought about a significant increase in U.S. ending stocks with carryover stocks as of August 1, 2007 estimated to balloon to 9.2 million bales, the second highest in forty years. Should carryover stocks in the U.S. increase another 150,000 bales it will the largest carryout ever.
USDA increased its estimate of world consumption slightly, as well as world ending carryover. More and more it is believed that the Chinese crop is larger than the 30.9 million bales, left unchanged in USDA's estimates. Eventually, it may well be that the Chinese crop is 31.3 million bales.
Yet, this would only partially explain the industry's consistent over estimation of Chinese cotton demand throughout the year. Additionally, it is thought that Chinese domestic stocks were measurably underestimated. These two factors, coupled with the bumper crop in India-making India a major exporter to China in 2006-07-led to the significant reduction in U.S. exports during the marketing year.
Nevertheless, weekly U.S. exports have been impressive for three consecutive weeks with China being the major buyer. While it is a case of too little too late, the Chinese purchases should support the market at the current lows. These sales, coupled with the disappearance of the large supply of Indian cotton offered to the export market, and the declining value of the U.S. dollar in world markets should be reason enough to support both old crop and new crop at their respective lows.
The market is greener, but it will march in step a bit longer as it awaits Mother Nature to show her cards.
USDA increased its estimate of world consumption slightly, as well as world ending carryover. More and more it is believed that the Chinese crop is larger than the 30.9 million bales, left unchanged in USDA's estimates. Eventually, it may well be that the Chinese crop is 31.3 million bales.
Yet, this would only partially explain the industry's consistent over estimation of Chinese cotton demand throughout the year. Additionally, it is thought that Chinese domestic stocks were measurably underestimated. These two factors, coupled with the bumper crop in India-making India a major exporter to China in 2006-07-led to the significant reduction in U.S. exports during the marketing year.
Nevertheless, weekly U.S. exports have been impressive for three consecutive weeks with China being the major buyer. While it is a case of too little too late, the Chinese purchases should support the market at the current lows. These sales, coupled with the disappearance of the large supply of Indian cotton offered to the export market, and the declining value of the U.S. dollar in world markets should be reason enough to support both old crop and new crop at their respective lows.
The market is greener, but it will march in step a bit longer as it awaits Mother Nature to show her cards.
O.A. Cleveland
Popular News
Leave your Comments
Esteemed Clients
-Ltd..jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Thermore (Far East) Ltd.")
.jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Telangana State Industrial Infrastructure Corporation Limited (TSllC Ltd)")
.jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Taiwan Textile Federation (TTF)")
