A third straight stronger close, but again on low volume. No doubt weΆve got some short-covering going on ahead of ThursdayΆs September Crop Report and supply/demand balance sheet updates for both the U.S. and worldwide.
The best chance of some bullish news is that USDA reduces estimated yield for the U.S. and leaves demand unchanged for another drop in ending stocks. Export sales are barely holding their own, still running a bit behind the pace needed to sustain USDAΆs current forecast. So despite the bullish news on increased Chinese consumption and continued policy of supporting prices by buying domestic production aggressively, thereΆs no good cause to expect an increase in the U.S. export estimate.
If there is some significantly bearish news, itΆs likely to come on the global balance sheet, where most analysts are expecting USDA to hike estimate Indian production by at least a million bales and possibly as high as 2 million according to others. Hopefully, that will be absorbed by increased usage estimates for China. But itΆs a long shot because less than two weeks ago Chinese officials indicated that country would be buying LESS cotton from India and posing a risk India would then put more cotton on the export market