Price Picture
Chart Source: Barchart.com
Trend Picture
Chart Source: Barchart.com
Notes
Nearby contract closed 36 points higher this week.
Managed money is net short.
Short-term, technical traders see possible support around 57.00, possible resistance around 60.00.
The trend is down.
May-16 is at: 60.07 Volume = 29,968
July-16 is at: 59.56 Volume = 23,668
Dec-16 is at: 58.84 Volume = 5,540
Cotlook ‘A’ Index is at: 67.00
Cash Sales
Most recently, on 2,129 bales traded, the trading platform TheSeam.com reported an average cash price of approximately: 54.02.
On May, that puts the average basis at approximately: -605 points.
Cash prices are averaging approximately 7.52 cents over loan value.
Stocks and Sales
ICE Certified Cotton Stocks = 36,316
US Net Upland Export Sales (2015/2016) = 210,900
Vietnam was the big buyer at 69,000.
Beginning Stocks: 112.17 (million 480 lb. bales)
Production: 100.22
Supply: 212.39
Mill Use: 109.21
Ending Stocks: 103.34
Ending Stocks/Mill Use Ratio: 94.6%
Current China Balance Sheet (2015/2016)
Beginning Stocks: 67.92 (million 480 lb. bales)
Production: 23.80
Imports – Exports: 4.8
Supply: 96.52
Mill Use: 32.00
Ending Stocks: 64.52
Ending Stocks/Mill Use Ratio: 201.6%
Current India Balance Sheet (2015/2016)
Beginning Stocks: 13.49 (million 480 lb. bales)
Production: 26.80
Imports – Exports: -4.6
Supply: 35.69
Mill Use: 24.50
Ending Stocks: 11.19
Ending Stocks/Mill Use Ratio: 45.7%
Current USA Balance Sheet (2015/2016)
Beginning Stocks: 3.7 (million 480 lb. bales)
Production: 12.94
Imports – Exports: -9.49
Supply: 7.15
Mill Use: 3.60
Ending Stocks: 3.60
Ending Stocks/Mill Use Ratio: 100.0%
Producer / Merchant
Long: 37,227 (Contracts)
Short: 78,395
Swap Dealers
Long: 73,018
Short: 5,735
Managed Money
Long: 41,288
Short: 50,387
Other Reportables
Long: 23,600
Short: 37,357
Cotton Club Letter Price Model: 55.7 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
Bearish.
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 4/8/2016“
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There is substantial risk of loss to futures and options trading.
Past performance may not be indicative of future results.
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