Price Picture
Chart Source: Barchart.com
Trend Picture
Chart Source: Barchart.com
Notes
Nearby contract closed 1 point higher this week.
Managed money is net short.
Short-term, technical traders see possible support around 56.00, possible resistance around 59.00.
The trend is down.
Price
May-16 is at: 57.16 Volume = 16,258
July-16 is at: 57.06 Volume = 6,060
Dec-16 is at: 56.90 Volume = 1,976
Cotlook ‘A’ Index is at: 66.40
Cash Sales
Most recently, on 197 bales traded, the trading platform TheSeam.com reported an average cash price of approximately: 54.79.
On May, that puts the average basis at approximately: -327 points.
Cash prices are averaging approximately 5.31 cents over loan value.
Stocks and Sales
ICE Certified Cotton Stocks = 54,710
US Net Upland Export Sales (2015/2016) = 224,900
Vietnam was the big buyer at 120,600.
Current World Balance Sheet (2015/2016)
Beginning Stocks: 112.17 (million 480 lb. bales)
Production: 100.22
Supply: 212.39
Mill Use: 109.21
Ending Stocks: 103.34
Ending Stocks/Mill Use Ratio: 94.6%
Current China Balance Sheet (2015/2016)
Beginning Stocks: 67.92 (million 480 lb. bales)
Production: 23.80
Imports – Exports: 4.8
Supply: 96.52
Mill Use: 32.00
Ending Stocks: 64.52
Ending Stocks/Mill Use Ratio: 201.6%
Current India Balance Sheet (2015/2016)
Beginning Stocks: 13.49 (million 480 lb. bales)
Production: 26.80
Imports – Exports: -4.6
Supply: 35.69
Mill Use: 24.50
Ending Stocks: 11.19
Ending Stocks/Mill Use Ratio: 45.7%
Current USA Balance Sheet (2015/2016)
Beginning Stocks: 3.7 (million 480 lb. bales)
Production: 12.94
Imports – Exports: -9.49
Supply: 7.15
Mill Use: 3.60
Ending Stocks: 3.60
Ending Stocks/Mill Use Ratio: 100.0%
Commitments of Traders
Producer / Merchant
Long: 39,646 (Contracts)
Short: 66,594
Swap Dealers
Long: 65,388
Short: 6,298
Managed Money
Long: 43,149
Short: 56,195
Other Reportables
Long: 21,815
Short: 36,473
Current Cotton Price Model: 55.7 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: X cents.”
*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.
Click Here to Read: “10 Points on the ICE Cotton #2 Chart (CT) – Week Ending 3/18/2016“
The Cotton Club 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[at]outlook[dot]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.
