Sterling Terrell

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You are here: Home / Not Books / The Cotton Club Letter – For Week Ending 5/20/2016

The Cotton Club Letter – For Week Ending 5/20/2016

The Cotton Club Letter – For Week Ending 5/20/2016

  Price Picture

Chart Source: Barchart.com

Trend Picture

Chart Source: Barchart.com

Notes
Nearby contract closed 105 points higher this week.
Managed money is net long.
Short-term, technical traders see possible support around 61.20, possible resistance around 62.20.
The trend is down.

Price
July-16 is at:   61.67        Volume = 12,731
Dec-16 is at:   61.33        Volume = 3,751
Mar-17 is at:   61.60        Volume =17
Cotlook ‘A’ Index is at: 70.20
Cash Sales
Recently, on 1,658 bales traded, the trading platform TheSeam.com reported an average cash price of approximately: 55.83.
On the nearby contract, that puts the average basis at approximately: -584 points.
Cash prices are averaging approximately 7.80 cents over loan value.
Stocks and Sales
ICE Certified Cotton Stocks = 89,050
US Net Upland Export Sales (2015/2016) = 189,400
    Vietnam was the big buyer at 58,700.
Current World Balance Sheet (2016/2017)
Beginning Stocks: 102.84 (million 480 lb. bales)
Production: 104.36
Supply: 207.2
Mill Use: 110.78
Ending Stocks: 96.48
Ending Stocks/Mill Use Ratio: 87.1%
Current China Balance Sheet (2015/2016)
Beginning Stocks: 63.32 (million 480 lb. bales)
Production: 22.50
Imports – Exports: 4.4
Supply: 90.22
Mill Use: 33.50
Ending Stocks: 57.72
Ending Stocks/Mill Use Ratio: 172.3%

Current India Balance Sheet (2015/2016)
Beginning Stocks: 10.89 (million 480 lb. bales)
Production: 28.00
Imports – Exports: -3.10
Supply: 35.79
Mill Use: 24.50
Ending Stocks: 11.29
Ending Stocks/Mill Use Ratio: 46.1%
Current USA Balance Sheet (2015/2016)
Beginning Stocks: 4.0 (million 480 lb. bales)
Production: 14.80
Imports – Exports: -10.49
Supply: 8.31
Mill Use: 3.60
Ending Stocks: 4.70
Ending Stocks/Mill Use Ratio: 130.6%
Commitments of Traders
Producer / Merchant
    Long:  15,365  (Contracts)
    Short: 107,227
Swap Dealers
    Long:  65,320
    Short:  6,803
Managed Money
    Long:  51,321
    Short:  25,945
Other Reportables
    Long:  21,852
    Short:  18,546
Cotton Club Letter Price Model: 52.6 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 5/20/2016“
====================
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.

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Filed Under: Not BooksTagged With: #TheCottonClubLetter

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