Healthy net sales of cotton for week ending April 26
05 May '07
3 min read
The continued decline in expectations surrounding U.S. exports, now likely to fall between 12.0 and 12.5 million bales (well below the current USDA estimate of 13.5 million)has lead to an increase in the buildup of certificated stocks. Cert stocks are above 716,000 bales with prospect of rising to 800,000. Yet, even at the current level, market prices are prevented from realizing any recognizable gain with cert stocks at this level. Assuming normal crop development, the market will remain in the doldrums until there is evidence of substantial 2007-08 export demand for U.S. cotton.
Net sales of all cotton for the week ending April 26 were a healthy 401,300 running bales, but with only about 25% of the sales to China. Weekly shipments totaled only 346,600 running bales. (Running bales, also know as physical bales are converted to 480-pound bales, also known as statistical bales by multiplying running bales by 1.0416.) According to Globecot weekly shipments need to average 366,437 480-pound bales for the remainder of the year for exports to total 12.0 million bales. To meet the current USDA estimate, weekly shipments have to average 436,395 bales.
With carryover now expected to exceed 10 million bales and a multitude of CCC loans set to expire before harvest, equity prices have plummeted to near zero in many cases. Additionally, some equities have sold at a negative value. This is treading on new territory for U.S. cotton growers. However, the floor on equity values will be just above the CCC loan value minus the respective loan forfeiture cost to the grower-again new territory for the grower.
December futures has the potential to fall another five cents.
20240830145952.gif)
.jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "UBM China (Shanghai)")
-Ltd..jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Thermore (Far East) Ltd.")
