By admin       2018-10-15

Back to supply demand and price. In its October report USDA estimated the U.S. crop at 19.76 million bales, up 80,000 from last month. Exports were reduced 200,000 bales, down to 15.5 on the basis of tariff considerations. U.S. carryover was increased 300,000, up to 5.0 million bales. Likely, carryover stocks will be reduced to some 4.7 million when the damage from Hurricane Michael is factored in next month. The U.S. crop production and yield database can be viewed at https://release.nass.usda.gov/reports/crop1018.pdf World production was reduced marginally and was estimated at 121.66 million bales. The principal change was in Australia which saw a reduction of 500,000 bales. That crop is just being planted and drought concerns could reduce the crop further. World consumption was marginally lowered and was forecast at 127.76 million bales. The principal change in the report was the long awaited adjustment in the Indian situation. USDA revised some 15-16 years of data, ultimately lowering Indian stocks some 3 million bales. This was a major and significant adjustment for USDA. For three years we have been long lobbied USDA to correct their Indian database. Kudos to USDA for attempting to catch up. Now if they will only consider reducing those same Indian stocks another 2 million or more bales analysts will once again full respect the USDA estimates. Yet, as stated, this was a major bridge for USDA to cross. Excellent! Thus, world ending stocks, as of July 31, 2019 are now forecast at 74.5 million bales, down some 3 million bales from last month. More importantly, world ending stocks are now forecast some 9 million bales below world beginning stocks back on August 1, 2018. This represents a major reduction on the year and has the market poised to return to the 80 cent level, hopefully fulfilling some of our more grandiose projections of a return to the low to upper 80’s. The world supply demand estimates can be viewed at https://www.usda.gov/oce/commodity/wasde/latest.pdf

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