Price Picture
Chart Source: Barchart.com
Trend Picture
Chart Source: Barchart.com
Notes
Nearby contract closed 148 points higher this week.
Managed money is net short.
Short-term, technical traders see possible support around 57.00, possible resistance around 60.00.
The trend is down.
Price
May-16 is at: 59.20 Volume = 23,103
July-16 is at: 58.84 Volume = 12,622
Dec-16 is at: 58.26 Volume = 5,100
Cotlook ‘A’ Index is at: 65.70
Cash Sales
Most recently, on 6,511 bales traded, the trading platform TheSeam.com reported an average cash price of approximately: 53.35.
On May, that puts the average basis at approximately: -585 points.
Cash prices are averaging approximately 8.39 cents over loan value.
Stocks and Sales
ICE Certified Cotton Stocks = 45,712
US Net Upland Export Sales (2015/2016) = 86,400
Turkey was the big buyer at 25,900.
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: 38,277 (Contracts)
Short: 66,564
Swap Dealers
Long: 68,392
Short: 7,066
Managed Money
Long: 41,580
Short: 57,781
Other Reportables
Long: 22,735
Short: 35,032
Cotton Club Letter 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 4/1/2016“
The Cotton Club Letter archive can be found by clicking, here.
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*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.