Notes
Nearby contract closed approximately 1691 points higher over the last 30 days.
Managed money is net long.
Short-term, technical traders see possible support around 76.00, possible resistance around 80.00.
The trend is up.
Price
July-17 is at: 79.45 Volume = 21,076
Dec-17 is at: 73.45 Volume = 8,769
Mar-18 is at: 73.00 Volume = 1,097
Cotlook ‘A’ Index is at: 89.65
Cash Sales
Recently, on 6,669 bales traded, the trading platform TheSeam.com reported an average cash price of approximately: 79.55.
On the nearby contract, that puts the average basis at approximately: –194 points.
Cash prices are averaging approximately 25.87 cents over loan value.
Stocks and Sales
ICE Certified Cotton Stocks = 402,998
US Net Upland Export Sales (2016/2017) = 120,700
Vietnam was the big buyer at 51,600.
Current World Balance Sheet (2017/2018)
Beginning Stocks: 89.52 (million 480 lb. bales)
Production: 113.22
Mill Use: 115.75
Ending Stocks: 87.14.91
Current China Balance Sheet (2016/2017)
Beginning Stocks: 48.70 (million 480 lb. bales)
Production: 23.50
Mill Use: 37.50
Ending Stocks: 39.65
Current India Balance Sheet (2016/2017)
Beginning Stocks: 11.99 (million 480 lb. bales)
Production: 28.00
Mill Use: 24.00
Ending Stocks: 13.24
Current USA Balance Sheet (2016/2017)
Beginning Stocks: 3.2 (million 480 lb. bales)
Production: 19.20
Mill Use: 3.40
Ending Stocks: 5.00
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.
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