World production was forecast to be 113.0 million bales with a strong possibility that that production could fall to 110 million bales.
While noting that over 70 percent of the world cotton use is accounted for by China, India, Pakistan, Bangladesh and Indonesia, it was pointed out that the growth in global consumption was slowing slightly.
The percentage increase in consumption is slowing, but in terms of actual bales consumed, the growth rate has not slowed.
Yet, as cotton prices move higher, there will be a further tendency to slow cotton usage.
Suggesting that global stocks as of August 1 were 50 million bales, it was suggested that global ending stocks come July 31, 2007 could fall as low as 42 million bales.
While the speaker did not offer a trading range for New York December futures, it was noted that December futures would not fall below 50 cents.
My personal take is that with a 42 million bale carryover, New York futures are a lock to trade to 62 cents.
World weather problems, coupled with a very strong demand point to a clear path to higher prices.
marketing@alchempro.com
