Nearby contract closed approximately 86 points lower this week.
Managed money is net long.
Short-term, technical traders see possible support around 77.00, possible resistance around 78.70.
The trend is up.
May-17 is at: 77.47 Volume = 14,784
July-17 is at: 78.74 Volume = 8,110
Dec-17 is at: 75.49 Volume = 4,284
Cotlook ‘A’ Index is at: 86.85
Recently, on 16,340 bales traded, the trading platform TheSeam.com reported an average cash price of approximately: 79.85.
On the nearby contract, that puts the average basis at approximately: –238 points.
Cash prices are averaging approximately 24.90 cents over loan value.
Stocks and Sales
ICE Certified Cotton Stocks = 326,221
US Net Upland Export Sales (2016/2017) = 328,200
China was the big buyer at 98,100.
Current World Balance Sheet (2016/2017)
Beginning Stocks: 97.09 (million 480 lb. bales)
Mill Use: 112.43
Ending Stocks: 90.48
Ending Stocks/Mill Use Ratio: 80.5%
Current China Balance Sheet (2016/2017)
Beginning Stocks: 58.20 (million 480 lb. bales)
Mill Use: 36.25
Ending Stocks: 48.90
Ending Stocks/Mill Use Ratio: 134.9%
Current India Balance Sheet (2016/2017)
Beginning Stocks: 10.94 (million 480 lb. bales)
Mill Use: 23.75
Ending Stocks: 11.89
Ending Stocks/Mill Use Ratio: 50.1%
Current USA Balance Sheet (2016/2017)
Beginning Stocks: 3.8 (million 480 lb. bales)
Mill Use: 3.30
Ending Stocks: 4.50
Ending Stocks/Mill Use Ratio: 136.4%
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.