Export sales continue to be slightly positive

23 Jun '07

3 min read

Thus, with two consecutive weeks reaching market year highs, shipments are on track to meet the USDA estimate of 13.0 million bales-finally, a positive for the market. In fact, should the past two week's numbers continue for the remainder of the year, USDA will find it necessary to raise exports as much as 200,000 bales.

Additionally, with the current sales occurring at these "elevated" price levels, it also bodes well for the USDA export estimate for 2008-09 and, thus, validates the upward move in prices. Yet, as stated, for now prices have likely out run the export demand and will find more stability before beginning a move upward.

Nevertheless, once again we must remember that world carryover is not forecast to be significantly lowered during the 2007-08 marketing year. Too, the higher prices are bringing about increased certification with cert stocks now climbing close to 725,000 bales.

The higher prices have also had the effect of increased producer selling, thus we should anticipate merchants to increase their hedging practices immediately. The funds have brought the market up, but we are near a stalling point.

O.A. Cleveland

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