Nearby contract closed approximately 234 points lower this week.
Managed money is net long.
Short-term, technical traders see possible support around 72.00, possible resistance around 76.00.
The trend is up.
Mar-17 is at: 73.48 Volume = 14,854
May-17 is at: 75.52 Volume = 28,200
July-17 is at: 76.47 Volume = 9,807
Cotlook ‘A’ Index is at: 85.80
Recently, on 12,346 bales traded, the trading platform TheSeam.com reported an average cash price of approximately: 72.22.
On the nearby contract, that puts the average basis at approximately: -126 points.
Cash prices are averaging approximately 18.94 cents over loan value.
Stocks and Sales
ICE Certified Cotton Stocks = 306,725
US Net Upland Export Sales (2016/2017) = 222,200
Turkey was the big buyer at 89,500.
Current World Balance Sheet (2016/2017)
Beginning Stocks: 96.83 (million 480 lb. bales)
Mill Use: 112.52
Ending Stocks: 89.90
Ending Stocks/Mill Use Ratio: 79.9%
Current China Balance Sheet (2016/2017)
Beginning Stocks: 58.20 (million 480 lb. bales)
Mill Use: 36.25
Ending Stocks: 48.85
Ending Stocks/Mill Use Ratio: 134.8%
Current India Balance Sheet (2016/2017)
Beginning Stocks: 10.94 (million 480 lb. bales)
Mill Use: 23.75
Ending Stocks: 11.59
Ending Stocks/Mill Use Ratio: 48.8%
Current USA Balance Sheet (2016/2017)
Beginning Stocks: 3.8 (million 480 lb. bales)
Mill Use: 3.30
Ending Stocks: 4.80
Ending Stocks/Mill Use Ratio: 145.5%
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.
Keep in mind that while this is a weekly letter, I can easily change my mind in 24 hours.
The Cotton Club Letter Archive can be found by clicking, here
If this was forwarded to you and you’d like to sign up, email me at sterlingterrellAToutlookDOTcom with “Cotton Club” in the subject line.