Price Picture
Trend Picture
Chart Source: Barchart.com
Notes
Nearby contract closed 42 points lower this week.
Managed money is net short.
Short-term, technical traders see possible support around 56.00, possible resistance around 58.00.
The trend is down.
Price
May-16 is at: 57.11 Volume = 11,436
July-16 is at: 56.71 Volume = 4,795
Dec-16 is at: 56.45 Volume = 2,065
Cotlook ‘A’ Index is at: 64.05
Cash Sales
Most recently, on 5,893 bales traded, the trading platform TheSeam.com reported an average cash price of approximately: 50.84.
On May, that puts the average basis at approximately: -627 points.
Cash prices are averaging approximately 7.79 cents over loan value.
Stocks and Sales
ICE Certified Cotton Stocks = 72,178
US Net Upland Export Sales (2015/2016) = 173,900
Turkey was the big buyer at 69,100.
Current World Balance Sheet (2015/2016)
Beginning Stocks: 112.17 (million 480 lb. bales)
Production: 101.38
Supply: 213.55
Mill Use: 110.60
Ending Stocks: 104.08
Ending Stocks/Mill Use Ratio: 94.1%
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: 27.80
Imports – Exports: -4.8
Supply: 36.49
Mill Use: 24.50
Ending Stocks: 11.99
Ending Stocks/Mill Use Ratio: 48.9%
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: 34,670 (Contracts)
Short: 66,657
Swap Dealers
Long: 57,703
Short: 6,548
Managed Money
Long: 48,930
Short: 54,593
Other Reportables
Long: 24,201
Short: 32,710
Dec. Cotton Price Model: 54.9 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 3/4/2016“
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There is substantial risk of loss to futures and options trading.
Past performance may not be indicative of future results.
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