Notes
Nearby contract closed approximately 334 points higher this week.
Managed money is net long.
Short-term, technical traders see possible support around 72.00, possible resistance around 74.00.
The trend is up.
Price
Mar-17 is at: 73.99 Volume = 19,101
May-17 is at: 74.29 Volume = 5,706
July-17 is at: 74.53 Volume = 2114
Cotlook ‘A’ Index is at: 82.95
Cash Sales
Recently, on 11,762 bales traded, the trading platform TheSeam.com reported an average cash price of approximately: 68.42.
On the nearby contract, that puts the average basis at approximately: –557 points.
Cash prices are averaging approximately 15.55 cents over loan value.
Stocks and Sales
ICE Certified Cotton Stocks = 90,639
US Net Upland Export Sales (2016/2017) = 183,700
China was the big buyer at 51,100.
Current World Balance Sheet (2016/2017)
Beginning Stocks: 96.80 (million 480 lb. bales)
Production: 104.24
Mill Use: 111.91
Ending Stocks: 89.15
Ending Stocks/Mill Use Ratio: 79.7%
Current China Balance Sheet (2016/2017)
Beginning Stocks: 58.20 (million 480 lb. bales)
Production: 21.00
Mill Use: 35.75
Ending Stocks: 47.85
Ending Stocks/Mill Use Ratio: 133.8%
Current India Balance Sheet (2016/2017)
Beginning Stocks: 10.94 (million 480 lb. bales)
Production: 27.00
Mill Use: 23.75
Ending Stocks: 11.79
Ending Stocks/Mill Use Ratio: 49.6%
Current USA Balance Sheet (2016/2017)
Beginning Stocks: 3.8 (million 480 lb. bales)
Production: 16.52
Mill Use: 3.50
Ending Stocks: 4.80
Ending Stocks/Mill Use Ratio: 137.1%
Swap Dealers
Cotton Club Letter Price Model: Current Price Is Available By 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 The Last: 10 Points on the ICE Cotton #2 Chart(CT)
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