Price Picture
Chart Source: Barchart.com
Trend Picture
Chart Source: Barchart.com
Notes
Nearby contract closed 82 points higher this week.
Managed money is net long.
Short-term, technical traders see possible support around 65.50, possible resistance around 66.80.
The trend is up.
Dec-16 is at: 65.81 Volume = 26,090
Mar-17 is at: 65.93 Volume = 3,852
May-17 is at: 66.14 Volume = 563
Mar-17 is at: 65.93 Volume = 3,852
May-17 is at: 66.14 Volume = 563
Cotlook ‘A’ Index is at: 75.95
Cash Sales
Recently, on 611 bales traded, the trading platform TheSeam.com reported an average cash price of approximately: 62.38.
On the nearby contract, that puts the average basis at approximately: –3.43 points.
Cash prices are averaging approximately 11.47 cents over loan value.
Stocks and Sales
ICE Certified Cotton Stocks = 135,163
US Net Upland Export Sales (2015/2016) = 201,900
Vietnam was the big buyer at 102,400.
Beginning Stocks: 102.08 (million 480 lb. bales)
Production: 103.17
Supply: 205.25
Mill Use: 110.59
Ending Stocks: 94.73
Ending Stocks/Mill Use Ratio: 85.7%
Current China Balance Sheet (2015/2016)
Beginning Stocks: 62.30 (million 480 lb. bales)
Production: 21.50
Imports – Exports: 4.4
Supply: 88.20
Mill Use: 33.50
Ending Stocks: 54.70
Ending Stocks/Mill Use Ratio: 163.3%
Current India Balance Sheet (2015/2016)
Beginning Stocks: 11.04 (million 480 lb. bales)
Production: 28.00
Imports – Exports: -3.30
Supply: 35.74
Mill Use: 24.25
Ending Stocks: 11.49
Ending Stocks/Mill Use Ratio: 47.4%
Current USA Balance Sheet (2015/2016)
Beginning Stocks: 4.1 (million 480 lb. bales)
Production: 14.80
Imports – Exports: -10.49
Supply: 8.41
Mill Use: 3.60
Ending Stocks: 4.80
Ending Stocks/Mill Use Ratio: 133.3%
Producer / Merchant
Long: 12,554 (Contracts)
Short: 116,195
Swap Dealers
Long: 59,456
Short: 9,653
Managed Money
Long: 60,413
Short: 22,602
Other Reportables
Long: 25,518
Short: 16,220
Cotton Club Letter Price Model: 51.2 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: 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.
Click Here to Read: “10 Points on the ICE Cotton #2 Chart(CT) – Week Ending 7/8/2016“
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