Sterling Terrell

smart ideas from books (mostly)

Cotton Price Model

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:  ____ cents.

Regression Statistics:

Regression Statistics
Multiple R 0.985897697
R Square 0.971994269
Adjusted R Square 0.933742836
Standard Error 12.96136825
Observations 41

Current:

Historical:

June 2017 CPM:  59.2 cents, U.S
May 2017 CPM:  59.6 cents, U.S
April 2017 CPM:  57.8 cents, U.S
March 2017 CPM:  54.2 cents, U.S
February 2017 CPM:  53.2 cents, U.S
January 2017 CPM:  48.7 cents, U.S.
December 2016 CPM:  52.4 cents, U.S.
November 2016 CPM:  53.4 cents, U.S.
October 2016 CPM:  54.0 cents, U.S.
September 2016 CPM: 50.4
August 2016 CPM: 50.7
July 2016 CPM: 52.0
June 2016 CPM: 51.2 cents, U.S.
May 2016 CPM: 52.6 cents, U.S.
April 2016 CPM: 54.4 cents, U.S.
March 2016 CPM:  55.7 cents, U.S
February 2016 CPM:  54.9 cents, U.S
January 2016 CPM:  58.3 cents, U.S.
December 2015 CPM:  55.4 cents, U.S.
November 2015 CPM:  56.3 cents, U.S.
October 2015 CPM:  58.3 cents, U.S.
September 2015 CPM:  60.1 cents, U.S.
August 2015 CPM:  62.2 cents, U.S. (Model Change)
August 2015 CPM:  60.6 cents, U.S.
July 2015 CPM:  55.6 cents, U.S.
June 2015 CPM:  62.6 cents, U.S.
May 2015 CPM:  55.4 cents, U.S.
April 2015 CPM:  59.4 cents, U.S.
March 2015 CPM:  60.3 cents, U.S.
February 2015 CPM:  60.8 cents, U.S.
 
Note:

This model does not attempt to forecast the future direction or level of cotton prices.

I believe most people’s pockets are not as deep as the market’s when it comes to questions about what the market “should” be doing.

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