Price Picture
Chart Source: barchart.com
Notes
Nearby contract closed around 50 points higher this week.
Managed money is net long.
Short-term, technical traders see possible support around 63.00, possible resistance around 64.00.
The trend is down.
Managed money is net long.
Short-term, technical traders see possible support around 63.00, possible resistance around 64.00.
The trend is down.
Price
Dec-15 is at: 63.13 Volume = 24,690
March-16 is at: 63.91 Volume = 5,465
May-16 is at: 63.30 Volume = 385
Cotlook ‘A’ Index is at: 70.00
Cash Sales
Most recently, on 714 bales traded, the trading platform TheSeam.com reported an average cash price of approximately: 58.77.
On Dec, that puts the average basis at approximately: –436 points.
Cash prices are averaging approximately 9.77 cents over loan value.
Stocks and Sales
ICE Certified Cotton Stocks = 58,472
US Net Upland Export Sales (2015/2016) = 83,400
(Mexico was the big buyer at 26,200.)
Current World Balance Sheet (2015/2016)
Beginning Stocks: 110.91 (million 480 lb. bales)
Production: 108.74
Supply: 219.65
Mill Use: 113.44
Ending Stocks: 106.26
Ending Stocks/Mill Use Ratio: 93.7%
Current China Balance Sheet (2015/2016)
Beginning Stocks: 66.92 (million 480 lb. bales)
Production: 26.00
Imports – Exports: 5.70
Imports – Exports: 5.70
Supply: 98.62
Mill Use: 34.00
Ending Stocks: 64.62
Ending Stocks/Mill Use Ratio: 190.1%
Current India Balance Sheet (2015/2016)
Beginning Stocks: 13.57 (million 480 lb. bales)
Production: 29.00
Imports – Exports: –3.95
Imports – Exports: –3.95
Supply: 38.62
Mill Use: 26.00
Ending Stocks: 12.92
Ending Stocks/Mill Use Ratio: 49.7%
Current USA Balance Sheet (2015/2016)
Beginning Stocks: 3.7 (million 480 lb. bales)
Production: 13.43
Imports – Exports: –10.19
Imports – Exports: –10.19
Supply: 6.94
Mill Use: 3.70
Ending Stocks: 3.2
Ending Stocks/Mill Use Ratio: 86.48%
Commitments of Traders
Producer / Merchant
- Long: 12,408 (Contracts)
- Short: 116,182
Swap Dealers
- Long: 65,975
- Short: 3,214
Managed Money
- Long: 53,878
- Short: 18,963
Other Reportables
- Long: 18,237
- Short: 13,557
June Cotton Price Model: 60.1 cents
A regression model, like the one located here 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: 60.1 cents.”
(*Note: This model does not attempt to forecast the future direction or level of cotton prices.)
(*Note: This model does not attempt to forecast the future direction or level of cotton prices.)
General View
Bearish.
(Keep in mind that while this is a weekly letter, I can easily change my mind in 24 hours.)
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*This is for informational purposes only, and not a recommendation to buy or sell.
*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.