While the United States Department of Agriculture (USDA) raised its global production estimate by a little more than a million bales to 115.6 mio bales, it maintained its relatively rosy outlook on demand at 121.7 mio bales.
There have been doubts in regards to such a strong consumption figure for next season, mainly due to China's inactivity over the last few months, but recent economic indicators are painting a fairly robust picture on demand.
US retail sales for July increased a stronger than expected 1.4 percent, the best showing in six months. European retail sales have been encouraging as well this summer and the news out of emerging markets is still very good, particularly in China, where retail sales grew by 13.7 percent in July (with clothing up 18.2 percent), according to the National Bureau of Statistics.
These strong economic numbers coming out of China do not match up with the quiet market conditions of late. Either these statistics are all wrong or we should expect the market to heat up in the not to distant future.
The trade has not much of an incentive to sell the market below 55.00 cents, but with the chart starting to turn down, we may see some spec selling further pressuring values over the next few days. We therefore expect a somewhat lower trading range of around 53.00 - 56.00 cents in the foreseeable future.
marketing@alchempro.com
