Notes
Nearby contract closed approximately 77 points higher this week.
Managed money is net long.
Short-term, technical traders see possible support around 72.00, possible resistance around 73.30.
The trend is up.
Price
Mar-17 is at: 73.04 Volume = 12,411
May-17 is at: 73.26 Volume = 6,146
July-17 is at: 75.25 Volume = 1,587
Cotlook ‘A’ Index is at: 81.50
Cash Sales
Recently, on 15,943 bales traded, the trading platform TheSeam.com reported an average cash price of approximately: 68.41.
On the nearby contract, that puts the average basis at approximately: –463 points.
Cash prices are averaging approximately 14.40 cents over loan value.
Stocks and Sales
ICE Certified Cotton Stocks = 117,526
US Net Upland Export Sales (2016/2017) = 346,500
Vietnam was the big buyer at 67,700.
Current World Balance Sheet (2016/2017)
Beginning Stocks: 96.89 (million 480 lb. bales)
Production: 105.34
Mill Use: 111.76
Ending Stocks: 90.65
Ending Stocks/Mill Use Ratio: 81.1%
Current China Balance Sheet (2016/2017)
Beginning Stocks: 58.20 (million 480 lb. bales)
Production: 22.00
Mill Use: 36.25
Ending Stocks: 48.35
Ending Stocks/Mill Use Ratio: 133.4%
Current India Balance Sheet (2016/2017)
Beginning Stocks: 10.94 (million 480 lb. bales)
Production: 27.00
Mill Use: 23.25
Ending Stocks: 12.09
Ending Stocks/Mill Use Ratio: 52.0%
Current USA Balance Sheet (2016/2017)
Beginning Stocks: 3.8 (million 480 lb. bales)
Production: 16.96
Mill Use: 3.30
Ending Stocks: 5.00
Ending Stocks/Mill Use Ratio: 151.5%
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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