Notes
Nearby contract closed approximately 24 points lower this week.
Managed money is net long.
Short-term, technical traders see possible support around 66.00, possible resistance around 70.00.
The trend is up.
Price
Mar-17 is at: 68.11 Volume = 2,498
May-17 is at: 68.20 Volume = 220
Cotlook ‘A’ Index is at: 77.15
Cash Sales
Recently, on 122 bales traded, the trading platform TheSeam.com reported an average cash price of approximatley: 64.84.
On the nearby contract, that puts the average basis at approximately: -295 points.
Cash prices are averaging approximately 11.03 cents over loan value.
Stocks and Sales
ICE Certified Cotton Stocks = 42,158
US Net Upland Export Sales (2016/2017) = 309,200
Vietnam was the big buyer at 66,800.
Current World Balance Sheet (2016/2017)
Beginning Stocks: 99.18 (million 480 lb. bales)
Production: 101.58
Supply: 200.76
Mill Use: 111.26
Ending Stocks: 89.61
Ending Stocks/Mill Use Ratio: 80.5%
Current China Balance Sheet (2016/2017)
Beginning Stocks: 60.30 (million 480 lb. bales)
Production: 21.00
Imports – Exports: 4.4
Supply: 85.70
Mill Use: 35.00
Ending Stocks: 50.70
Ending Stocks/Mill Use Ratio: 144.9%
Current India Balance Sheet (2016/2017)
Beginning Stocks: 10.86 (million 480 lb. bales)
Production: 27.00
Imports – Exports: -3.2
Supply: 34.66
Mill Use: 24.00
Ending Stocks: 10.66
Ending Stocks/Mill Use Ratio: 44.4%
Current USA Balance Sheet (2016/2017)
Beginning Stocks: 3.9 (million 480 lb. bales)
Production: 15.88
Imports – Exports: -11.49
Supply: 8.29
Mill Use: 3.60
Ending Stocks: 4.70
Ending Stocks/Mill Use Ratio: 130.5%
Swap Dealers
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.”
*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 9/2/2016“
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