Sterling Terrell

recovering economist

Taif, Saudi Arabia, Al Gaim Compound – Camel Ride

Taif, Saudi Arabia, Al Gaim Compound – Camel Ride

I once was young. And I lived in Saudi Arabia.

Chop Chop!  I need to be in Jeddah by Friday.

Sadly, this is where I wrote about when I said: You Can Never Go Home Again.

Click here to read: 7 Things I Learned While Living In Saudi Arabia.
Click here to read: A List Of Things I Remember About Living In Saudi Arabia

The Cotton Club Letter – For Week Ending 6/19/2015

The Cotton Club Letter – For Week Ending 6/19/2015
 
Price Picture
 
 
Chart Source:  barchart.com

Trend Picture
Chart Source:  barchart.com
 
Notes
Nearby contract closed around 50 points lower this week.
Managed money is net long. 
Short-term, technical traders see possible support around 63.50, possible resistance around 66.00.  
The trend is down.
Price 
July-15 is at:  63.32       Volume = 3,643
Oct-15 is at:  65.06       Volume =  19
Dec-15 is at:  63.90       Volume = 16,013
March-16 is at:  64.03   Volume = 817
Cotlook ‘A’ Index is at:  71.85
 
Cash Sales
Most recently, the trading platform TheSeam.com reported an average cash price of approximately: 63.20.
On Dec, that puts the average basis at approximately:  –70 points.
Cash prices are averaging approximately 9.19 cents over loan value.

Stocks and Sales

ICE Certified Cotton Stocks = 175,728        
US Net Upland Export Sales = 42,600        
(Vietnam was the big buyer at 21,500.)

Current World Balance Sheet (2015/2016)
Beginning Stocks:  110.01  (million 480 lb. bales)
Production:  111.32
Supply:  221.33
Mill Use:  115.31
Ending Stocks:  106.08
Ending Stocks/Mill Use Ratio:  91.99%

Current China Balance Sheet (2015/2016)

Beginning Stocks:  65.63 (million 480 lb. bales)
Production:  27.00
Imports – Exports:  5.95
Supply:  98.58
Mill Use:  36.00
Ending Stocks:  62.58
Ending Stocks/Mill Use Ratio:  173.83%

Current India Balance Sheet (2015/2016)

Beginning Stocks:  13.67 (million 480 lb. bales)
Production: 29.50
Imports – Exports:  –4.1
Supply:  39.07
Mill Use:  25.75
Ending Stocks:  13.32

Ending Stocks/Mill Use Ratio:  51.73%

 
Current USA Balance Sheet (2015/2016) 

Beginning Stocks:  4.4 (million 480 lb. bales)
Production:  14.50
Imports – Exports:  -10.69
Supply: 8.21
Mill Use:  3.80
Ending Stocks:  4.4
Ending Stocks/Mill Use Ratio:  115.79%
 
Commitments of Traders 
Producer / Merchant
  • Long:  14,260  (Contracts)
  • Short: 105,130
Swap Dealers

  • Long:  58,456
  • Short: 2,169
Managed Money

  • Long:  52,082
  • Short:  24,297
Other Reportables

  • Long: 14,354
  • Short: 11,656
 

June Cotton Price Model:  62.55 cents 

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:  62.55 cents.”

(*Note:  This model does not attempt to forecast the future direction or level of cotton prices.)
 

General View 
Bearish.

(Keep in mind that while this is a weekly letter, I can easily change my mind in 24 hours.)

This letter archive can be found by clicking, here.
 
If this email was forwarded to you and you’d like to sign up, email me at sterlingterrell@hotmail.com with “Cotton Club” in the subject line.  Email with “Stop Cotton” in the subject line to be removed.

*This is for informational purposes only, and not a recommendation to buy or sell.
There is substantial risk of loss to futures and options trading. 
Past performance may not be indicative of future results. 
One should carefully consider their financial suitability prior to trading futures or options.
Sterling Terrell