World cotton stocks to decline between 2.5 and 3mn bales
16 Oct '06
3 min read
Cotton futures continued their downward slide during the week and the release of the October USDA world supply demand report this week provided all the justification needed to explain why prices fell below the 52 cent level three weeks ago.
While the report was very bearish, it is most likely that all the news and information was already in the market.
Nevertheless, New York futures may likely ease a bit lower into the peak harvest season and into the first two weeks of November. The 47 cent level, or just below 48 cents, is viewed as a support level for December.
The market will need a close above 50.50 cents to insure a run up to 52 cents.
USDA's estimate of the world crop jumped higher-led by increases in China and the U.S.-and is now placed at 116.19 million bales, 2.0 million above the last month's estimate.
Additionally, USDA raised its estimate of beginning stocks as of August 1, 2006 by 2.53 million bales. Thus, production plus beginning stocks, or the total availability of cotton to the market for 2006-07, are 3.78 million bales more that the September estimate, a major and significant adjustment.
Further, world consumption was lowered 1.26 million bales. Thus, ending stocks for the 2006-07 marketing year are now forecast to be 52.26 million bales, or 5.53 million more than last month's forecast.
World stocks will decline during the year between 2.5 to 3.0 million bales, compared to the nearly6.0 million bale decline forecast last month.
-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)")
