NY futures bounces back & forth in 205 point range
11 Aug '06
3 min read
Tomorrow the USDA will release its first detailed US crop report, as well as its monthly world supply and demand numbers.
The problem is that states with an index of over 100 account for just under 4.0 mio of the 15.3 mio planted acres, and as a result the national average computes at an index of just 83, down from 100 in last year's record crop.
Last month the United States Department of Agriculture(USDA) had already factored in an abandonment of 2.5 mio acres, most of it in Texas, estimating harvested acreage at just 12.8 mio acres.
Based on that acreage, an average yield of 750 lbs would produce a crop of 20.0 mio bales, while every 25 lbs drop in yield translates into 670'000 bales less production.
Prior to the 2003/04 season, the top yield was just slightly over 700 lbs, which based on the above acreage would produce around 18.7 mio bales.
With dryland not yielding much this season and with a lot of irrigated acres having been stressed as well, it may be unrealistic to expect much more than 700 lbs.
As far as world numbers go, apart from a drop in the US we expect a production increase in the Indian Subcontinent, while Brazil and Australia may get scaled down a bit. Overall, we do not see a major change in world output.
A neutral set of numbers - the most likely outcome in our opinion - will continue the current trading range of between 55.00 - 58.00 cents.
Only an unexpectedly bullish report will force mills into action and possibly trigger enough spec buying to get the market through overhead resistance.
marketing@alchempro.com
