Price Picture
Chart Source: Barchart.com
Trend Picture
Chart Source: Barchart.com
Notes
Nearby contract closed 47 points higher this week.
Managed money is net long.
Short-term, technical traders see possible support around 64.00, possible resistance around 66.00.
The trend is up.
Dec-16 is at: 64.99 Volume = 17,089
Mar-17 is at: 65.24 Volume = 2,042
May-17 is at: 65.48 Volume = 221
Mar-17 is at: 65.24 Volume = 2,042
May-17 is at: 65.48 Volume = 221
Cotlook ‘A’ Index is at: 76.15
Cash Sales
Recently, on 335 bales traded, the trading platform TheSeam.com reported an average cash price of approximately: 56.57.
On the nearby contract, that puts the average basis at approximately: -8.42 points.
Cash prices are averaging approximately 6.55 cents over loan value.
Stocks and Sales
ICE Certified Cotton Stocks = 135,163
US Net Upland Export Sales (2015/2016) = 58,700
Indonesia was the big buyer at 19,300.
Beginning Stocks: 102.08 (million 480 lb. bales)
Production: 103.17
Supply: 205.25
Mill Use: 110.59
Ending Stocks: 94.73
Ending Stocks/Mill Use Ratio: 85.7%
Current China Balance Sheet (2015/2016)
Beginning Stocks: 62.30 (million 480 lb. bales)
Production: 21.50
Imports – Exports: 4.4
Supply: 88.20
Mill Use: 33.50
Ending Stocks: 54.70
Ending Stocks/Mill Use Ratio: 163.3%
Current India Balance Sheet (2015/2016)
Beginning Stocks: 11.04 (million 480 lb. bales)
Production: 28.00
Imports – Exports: -3.30
Supply: 35.74
Mill Use: 24.25
Ending Stocks: 11.49
Ending Stocks/Mill Use Ratio: 47.4%
Current USA Balance Sheet (2015/2016)
Beginning Stocks: 4.1 (million 480 lb. bales)
Production: 14.80
Imports – Exports: -10.49
Supply: 8.41
Mill Use: 3.60
Ending Stocks: 4.80
Ending Stocks/Mill Use Ratio: 133.3%
Producer / Merchant
Long: 11,467 (Contracts)
Short: 119,876
Swap Dealers
Long: 63,432
Short: 8,495
Managed Money
Long: 59,176
Short: 24,021
Other Reportables
Long: 25,607
Short: 15,563
Cotton Club Letter Price Model: 51.2 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
Bullish.
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 7/1/2016“
====================
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.