The September supply demand report, friendly to the market, had USDA raising India's 2005-06 consumption by 700,000 bales. Coupled with other changes for the 2005-06 marketing season, the beginning stocks for 2006-07 were reduced 311,000 bales, falling to 52.2 million bales.
Additionally, the 2006-07 Indian domestic consumption was also raised 700,000 bales. Chinese production was increased 500,000 bales.
World consumption was increased 122.2 million bales, an increase of 550,000 bales over the August estimate. Thus, 2006-07 world ending stocks were lowered to 45.7 million bales or 5.5 million bales below the year ago stock level. This represented a 1.6 million bale decline in the estimate of ending stocks from just one month ago.
The USDA data base, I contend, is very friendly to the market. Certainly, the USDA statistics are friendlier than those of most other institutions and the merchandising industry.
The world supply demand balance sheet, as most have predicted, is dramatically tightening. Any further crop deterioration will only add to the pressure to take the New York December to 57 cents.
Speakers at the AgriMarketing Teleconference on Thursday, led by Mike Stevens and Pat McClatchy suggested that growers look at the December 54 cent call. The call was about 133 points that day and would offer an excellent opportunity for growers if December did rally above 55 cents.
marketing@alchempro.com
