Globecot News Network
In its latest forecast of the size of the domestic harvest, the Cotton Association of India (CAI) reduced its projection for the third straight month in response to slower cotton arrivals, suggesting the market may see a similar reduction from the USDA in its June report due Wednesday. The CAI announced the 2008/09 harvest will only reach 29.075 million bales (170kgs), or roughly 22.7 million 480-lb. bales, 300,000 bales lower than the latest USDA forecast. This lower revision comes in response to evidence here showing a gradual slowdown in the pace of season-to-date arrivals at gins in India. In fact, in that analysis we anticipated the harvest size may be even lower, closer to 22.2 million 480-lb bales, or roughly 28.4 million 170-kg bales.
While the CAI has gradually pared back its forecast for this year, the USDA’s projection has remained steadfast in recent months. At 23.0 million bales, this current target would be down -6.5% from last year. But if our forecast comes to fruition—closer to the CAI forecast—the Indian harvest size would fall -9.8 percent from last year, the biggest annual drop in seven years. Accordingly, we look for the USDA to decline in step with the lower CAI projection, confirming our forecast here for mildly lower global ending stocks in 2008/09.