Notes
Nearby contract closed approximately 21 points lower this week.
Managed money is net long.
Short-term, technical traders see possible support around 71.00, possible resistance around 74.00.
The trend is up.
Price
Mar-17 is at: 71.04 Volume = 16,718
May-17 is at: 71.53 Volume = 38,797
July-17 is at: 71.54 Volume = 14,302
Cotlook ‘A’ Index is at: 80.05
Cash Sales
Recently, on 1,750 bales traded, the trading platform TheSeam.com reported an average cash price of approximately: 66.70.
On the nearby contract, that puts the average basis at approximately: –434 points.
Cash prices are averaging approximately 16.32 cents over loan value.
Stocks and Sales
ICE Certified Cotton Stocks = 22,231
US Net Upland Export Sales (2016/2017) = 202,300
Vietnam was the big buyer at 84,600.
Current World Balance Sheet (2016/2017)
Beginning Stocks: 96.91 (million 480 lb. bales)
Production: 103.28
Mill Use: 111.99
Ending Stocks: 88.31
Ending Stocks/Mill Use Ratio: 78.9%
Current China Balance Sheet (2016/2017)
Beginning Stocks: 58.20 (million 480 lb. bales)
Production: 21.00
Mill Use: 35.50
Ending Stocks: 48.10
Ending Stocks/Mill Use Ratio: 135.5%
Current India Balance Sheet (2016/2017)
Beginning Stocks: 10.94 (million 480 lb. bales)
Production: 27.00
Mill Use: 24.00
Ending Stocks: 11.54
Ending Stocks/Mill Use Ratio: 48.1%
Current USA Balance Sheet (2016/2017)
Beginning Stocks: 3.8 (million 480 lb. bales)
Production: 16.16
Mill Use: 3.50
Ending Stocks: 4.50
Ending Stocks/Mill Use Ratio: 128.6%
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.
Click Here to Read The Last: 10 Points on the ICE Cotton #2 Chart(CT)
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The Cotton Club Letter Archive can be found by clicking, here