However, this does not automatically mean that ending stocks will jump by the amount of these revisions, since the USDA currently shows a 5.0 mio bales 'adjustment factor' for China, which it may reduce accordingly.
Circumstantial evidence suggests that ending stocks in China were at a relatively low level at the end of last season, with 10-year old stocks fetching surprisingly high bids at government auctions, which means that any retroactive upward adjustment in ending stocks would not make sense.
India's crop number should also see a further increase of at least 0.5 mio bales to 24.0 mio bales, if local estimates are any guidance. We would therefore not be surprised to see world production for the 2007/08 crop rise towards 120 mio bales, which would be close to the record of 121.17 mio bales of three years ago.
While production seems to be headed higher, it will be interesting to see what the USDA does with consumption. So far the USDA has maintained a fairly optimistic view on global consumption at 127.8 mio bales, although the building of yarn stocks in several markets may be an indication of softer mill use, particularly in China.
marketing@alchempro.com
