USDA cuts another 500,000 bales off export projections
16 Apr '07
3 min read
USDA announced this weeks AWP at 42.37, down 101 points and the lowest since Thanksgiving. Producers LDP rose proportionately to 9.63 cents per pound. However, many in the merchandising trade believe that the AWP may be now very close to a bottom, and of course producer Loan Deficiency Payments at a top – That could conceivably have happened this very week.
World prices, as measured by foreign offering prices, have begun to shown a resistance to moving lower. Mill inquires and export demand has started to pick up notably with most growths – as should be expected at these low price levels.
Additionally, once there are sufficient new crop quotes (globally) available which will certainly happen within the next week or so, Cotlook will begin their six week blending process - transitioning current crop to new crop. With new crop about a nickel over current crop, the AWP will begin to rise.
The export sales report last week were good bringing total sales for the last three weeks to about 1.1 million bales. However, sales are not the problem as they are picking up nicely. In fact, this coming weeks report should be the best of the season. Shipments, on the other hand are way, way behind.
Unfortunately, Fridays consolidation gave no indication of a bottom. However, since the front end of the board had an inside day, buy stops should be beginning to build above each of last week's declining highs. Stochastics are giving extremely oversoldsingle digit readings. With the Goldman rolls out of the way, odds increase greatly that a corrective bounce will occur early this week, possibly.
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