Likewise, expectations are that the world crop will be lowered on the basis of as much as one million bale reduction in the Indian crop. Yet, at this early stage, it is doubtful that USDA will reduce that crop more than 500,000 bales.
Look for the Chinese crop to remain unchanged from the August estimate. Thus, other than India and the U.S., only minor adjustments are likely on the supply side of the market.
Demand estimates for both the US and the world will be little changed. Concerns regarding Chinese demand for raw cotton appear to have evaporated as China's mills continue to add more new modern spinning lines.
World trade will be little changed. While I do not expect USDA to raise Chinese demand, as has been the case for four years, offtake there is running well ahead of USDA estimates.
The announcement of new import licenses for Chinese mills by mid September lingers over the market. Thus, it is likely that that new quotas will not be announced until at least mid October to November.
A US crop estimate below 19.4 million bales will tweak the market higher.
The key will be Texas-whether that crop is estimated to be below 5.0 million bales. Should that be the case, New York will likely see a ride above 56 cents in short order.
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