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You are here: Home / Not Books / Cotton Club – For Week Ending: 2/27/2015

Cotton Club – For Week Ending: 2/27/2015

Cotton Club – For Week Ending:  2/27/2015
 
 
Price Picture
 
 
 
Chart Source:  barchart.com

Trend Picture
 



Chart Source:  barchart.com
 
Notes
ICE cotton dollar prices for July-15 closed around 20 points higher this week as prices finished at 65.22.  The Dec-15 contract finished at 65.85.  Open interest for July-15 is at 31,697 contracts. Dec-15 open interest is at 29,454. U.S. certified cotton stocks equaled 8,111 while U.S. net export sales were at 71,400 RB. Managed money is net long. Short-term, technical traders see possible support around 64.00 with possible resistance around 66.20.  The long-term trend is up.
 
Price 
July-15 is at:  65.22
Dec-15 is at:  65.85

Cotlook ‘A’ Index is at:  71.75
 
Cash Sales 
For 2/27/2015, the trading platform TheSeam.com reported an average cash price of: 50.28.
On July, that puts the average basis right at:  -1494 points.
Cash prices are averaging 6.38 cents over loan value.

Stocks and Sales
ICE Certified Cotton Stocks = 8,111                 
US Net Upland Export Sales = 71,400         
(China was the big buyer at 17,300.)

Current World Balance Sheet (2014/2015)
Beginning Stocks:  101.66  (million 480 lb. bales)
Production:  119.37
Supply:  221.03
Mill Use:  111.25
Ending Stocks:  109.84
Ending Stocks/Mill Use Ratio:  98.73%

Current China Balance Sheet (2014/2015)

Beginning Stocks:  62.71 (million 480 lb. bales)
Production:  30.00
Imports – Exports:  7.25
Supply:  99.96
Mill Use:  35.50
Ending Stocks:  64.46
Ending Stocks/Mill Use Ratio:  181.58%

Current India Balance Sheet (2014/2015)

Beginning Stocks:  11.52 (million 480 lb. bales)
Production:  30.50
Imports – Exports:  -3.10
Supply:  38.92
Mill Use:  24.00
Ending Stocks:  14.92

Ending Stocks/Mill Use Ratio:  62.16%

 
Current USA Balance Sheet (2014/2015) 
Beginning Stocks:  2.45 (million 480 lb. bales)
Production:  16.08
Imports – Exports:  -10.69
Supply:  7.84
Mill Use:  3.65
Ending Stocks:  4.2
Ending Stocks/Mill Use Ratio:  115.07%

 
Commitments of Traders 
Producer / Merchant
  • Long:  18,535  (Contracts)
  • Short: 116,801
Swap Dealers

  • Long:  49,276
  • Short:  4,534
Managed Money

  • Long:  65,934
  • Short:  20,219
Other Reportables

  • Long: 17,773
  • Short: 16,911
 

Cotton Price Model: 74 cents 
A regression model, like the one below can give insight into how prices, on average, would react given a change in one or more fundamental supply or demand factors.  A proper interpretation of this price model would be:

 
“Over the last number of years, if cotton supply and demand were at their current levels, we would – on average –  expect the US price of cotton to be approximately:  74 cents.”

(*Note:  This model does not attempt to forecast the direction or level of cotton prices.)
 
 

General View 
Bullish.  

(Keep in mind that while this is a weekly letter, I can easily change my mind in 24 hours.)

This letter archive can be found by clicking, here.
 
If this email was forwarded to you and you’d like to sign up, email me at sterlingterrell@hotmail.com with “Cotton Club” in the subject line.  Email with “Stop Cotton” in the subject line to be removed.

*This is for informational purposes only, and not a recommendation to buy or sell.
There is substantial risk of loss to futures and options trading. 
Past performance may not be indicative of future results. 
One should carefully consider their financial suitability prior to trading futures or options.

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