March adjustments were price neutral at the U.S. level, but price negative for the global balance sheet. So now we’ve got prices closing lower 9 straight sessions.
Pre-release estimates for U.S. ending stocks averaged 4.2 million bales, unchanged from USDA’s February. The private estimates ranged, however, from as low as 4.0 million to as high as 4.3 million. As it turns out, USDA made no changes whatever to the balance sheet other than to lower the upper end of its projected range for average farm price by 1 cent per lb. That range is now 59.0-62.0 vs. 59.0-63.0 in February.
Globally speaking, USDA raised beginning stocks slightly while reducing global production slightly. However it also reduced estimated global use for a net increase of 220,000 bales, to 110.86 million. This pushed global stocks relative to annual use from an already high 360-day supply in February to 362-days’ worth – essentially a fully year’s supply in ending stocks alone!
China still accounts for 59% of those stocks, however, the same as last month. And since these are ostensibly held in government-owned “reserves”;, some analysts discount their impact on the global balance sheet. But even if you subtract China’s production and stocks from the global balance sheet, ending stocks are still a 7-month supply, far beyond the 3-month supply considered the threshold of “tightness.”
