Nearby contract closed 160 points lower this week.
Managed money is net long.
Short-term, technical traders see possible support around 72.00, possible resistance around 73.60.
The trend is up.
Dec-16 is at: 72.68 Volume = 17,855
Mar-17 is at: 73.32 Volume = 4,565
May-17 is at: 73.29 Volume = 99
Cotlook ‘A’ Index is at: 83.85
Recently, on 726 bales traded, the trading platform TheSeam.com reported an average cash price of approximately: 64.66.
On the nearby contract, that puts the average basis at approximately: -8.02 points.
Cash prices are averaging approximately 13.33 cents over loan value.
Stocks and Sales
ICE Certified Cotton Stocks = 120,078
US Net Upland Export Sales (2015/2016) = 71,100
Vietnam was the big buyer at 26,600.
Current World Balance Sheet (2016/2017)
Beginning Stocks: 100.27 (million 480 lb. bales)
Mill Use: 111.60
Ending Stocks: 91.29
Ending Stocks/Mill Use Ratio: 81.8%
Current China Balance Sheet (2016/2017)
Beginning Stocks: 60.80 (million 480 lb. bales)
Imports – Exports: 4.4
Mill Use: 35.00
Ending Stocks: 51.70
Ending Stocks/Mill Use Ratio: 147.7%
Current India Balance Sheet (2016/2017)
Beginning Stocks: 11.19 (million 480 lb. bales)
Imports – Exports: -3.25
Mill Use: 24.00
Ending Stocks: 11.44
Ending Stocks/Mill Use Ratio: 47.7%
Current USA Balance Sheet (2016/2017)
Beginning Stocks: 3.9 (million 480 lb. bales)
Imports – Exports: -11.49Supply: 8.21
Mill Use: 3.60
Ending Stocks: 4.60
Ending Stocks/Mill Use Ratio: 127.8%
Cotton Club Letter Price Model: Subscription Only
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.”
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 7/22/2016“
The Cotton Club Letter Archive can be found by clicking, here.