Notes
Nearby contract closed approximately 199 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: 68.54 Volume = 3,039
May-17 is at: 68.98 Volume = 328
Cotlook ‘A’ Index is at: 77.95
Cash Sales
Recently, on 6,098 bales traded (B2B), the trading platform TheSeam.com reported an average cash price of approximately: 68.47.
On the nearby contract, that puts the average basis at approximately: +39 points.
Cash prices are averaging approximately 11.70 cents over loan value.
Stocks and Sales
ICE Certified Cotton Stocks = 32,073
US Net Upland Export Sales (2016/2017) = 91,600
China was the big buyer at 21,600.
Current World Balance Sheet (2016/2017)
Beginning Stocks: 98.55 (million 480 lb. bales)
Production: 102.47
Supply: 201.02
Mill Use: 111.23
Ending Stocks: 89.81
Ending Stocks/Mill Use Ratio: 80.7%
Current China Balance Sheet (2016/2017)
Beginning Stocks: 60.20 (million 480 lb. bales)
Production: 21.00
Imports – Exports: 4.4
Supply: 85.60
Mill Use: 35.00
Ending Stocks: 50.60
Ending Stocks/Mill Use Ratio: 144.6%
Current India Balance Sheet (2016/2017)
Beginning Stocks: 10.94 (million 480 lb. bales)
Production: 26.50
Imports – Exports: –2.9
Supply: 34.66
Mill Use: 24.00
Ending Stocks: 10.54
Ending Stocks/Mill Use Ratio: 43.9%
Current USA Balance Sheet (2016/2017)
Beginning Stocks: 3.8 (million 480 lb. bales)
Production: 16.14
Imports – Exports: -11.49
Supply: 8.45
Mill Use: 3.50
Ending Stocks: 4.90
Ending Stocks/Mill Use Ratio: 140.0%
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 9/30/2016“
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The Cotton Club Letter Archive can be found by clicking, here
